Investing 102

[96z28ss]

Wow I just looked at my KMI damn I never lost so much money before.
I wonder if we are all going to ride it down to a penny stock?

Here's hoping
it turns around in a year or two.

[GregWeld]

I ended up in KMI as a result of being a KMP share holder...and those of you who are Kinder Morgan holders know what has been going on over the past 8 months or so...a 50%+ drop in share price.

At this point I don't see a lot of reason to pull back at all, and I have been considering adding to my position since the stock is "on sale" these days and it would be nice to average down my price per share. I'm far from an expert though, and I'm curious if those of you with more experience see any reasons to be nervous (like the rest of the market seems to be with KMI!)?

I'm not the guy with more experience, but I'm curious to hear other's thoughts as well.

Of the seven positions I own two are oil, one being KMI. I started buying before I understood about keeping each position to 5%. I'm pretty far out of balance now which makes me hesitant to add more, but it would be a significant reduction in price.



In full disclosure, I own 25,000 shares of KMI -- and currently have a sizable paper loss on this holding.... almost a half million dollar "loss" (you don't lose anything until you sell - I'm not selling).

There are "rules" that we've discussed in Investing 102 -- one of which comes to mind - and has been restated many many times i.e., "Don't try to catch a falling knife".

With oil in free fall - we don't know where these oil and oil related shares will go. Currently we're in a market where anything remotely related is "toxic". If you're a holder - this is known as "pain". These are painful holdings right now. This is why we limit holdings to 5%.... so they're only somewhat damaging even if they went to zero... This is why I preach, at the very least - collecting a dividend while you wait for the possibility that the share price recovers.

I intend to buy more KMI to average my cost basis down..... but I'll do that a little bit (chunks) at a time because I fully expect more pain before a gain. The baby is being thrown out with the bathwater right now. I own a company (APU) that distributes LPG.... and it's just getting hammered. Why? No particular reason except that it's oil related.

Think of this like what happened when the mortgage debacle hit the housing market. Good builder or bad - the builders got creamed - lumber suppliers got creamed - bricks got taken to the woodshed - roofing manufactures - plumbing suppliers.... you name it. The guys that made a ton of money on the recovery of the housing market were the guys that bought shares - bought houses - bought apartments - when nobody else wanted 'em.

[GregWeld]

We're in such interesting times in the world - as well as the equity (stock) markets. We have oil plunging worldwide. We have entire governments that have suddenly discovered their policies of dipping into the ever bottomless barrel to support their spending habits are problematical (to say the least)... We have China waking up to discover that they too - are mere mortals... And we have the FED attempting (perhaps) to raise rates.

NOW ADD ---- End of year (December) tax selling and re-positioning. Stocks that are down - tend go down more because people need to take some losses to cover some gains - might as well sell the biggest losers - causing what? More losses...

Some of these "losers" will rebound - as the cash that is taken in from the sales eventually gets redeployed - and the stocks that were sold become "bargains". Funny how that works isn't it?? In the since that - As the shares fall - at some point they become desirable because of price...

What's the point?? The point is to understand and try to make some sense out of it all.... and to prepare yourself to try to buy some of the bargains - if you're a long term investor. The key is to understand yourself and being able to handle the fact that some of what you buy might be still in for some pain and you're just "early" (catching a falling knife). This is why you don't buy a total position all at once. Now - that applies only if you can apply it. Obviously if you're buying 10 or 20 shares - at that level you just buy the whole position. But if you plan to buy 100 shares -- try just buying 50 -- and waiting. Buying the next 50 (or not) after you have a better overall view - and have tested your fortitude and thought process.

I'm personally sitting on a mountain of cash - double what I normally have at any given time - earning nothing - but waiting for the first quarter of 2016 before I even think about buying. There's just so many "events" that are colliding and at times - almost seem overwhelming. This doesn't mean I'm planning on doing nothing - it means I'm waiting for some more clarity and direction. I don't even care if I think the direction is more pain. If that's the case - I'll just buy fewer shares with each buy. I know that I'll never catch the bottom of anything - and I'll never catch the top of anything on the sell side. I'm okay with that. I'm not greedy - I just want to catch "some" of it. In the meantime I'll collect and spend the dividend which - to me - is far more important.

[CRCRFT78]

My KMI shares are down 46% and for whatever reason, I don't care. That doesn't mean I am not watching though.

[PDXFactory]

That is my basic take - just to keep an eye on it and see where it goes. I did end up buying another small block, and have cash in reserves for when it (hopefully) finally turns the corner! I'm a little surprised that it has continued to drop...but it is the selling season!

Thanks to Greg and all for the feedback!

[So Cal Camaro]

I just bought a few more shares of KMI, always try to add a few more shares when I like the company and it is below my original entry point. I'm in for the long haul and eventually they usually rise again. Only one I got killed on ever is Lehman Brothers, but made a killing on others in the big downturn.

[WSSix]

x2 Jose. I'm not overly concerned yet either but I'm not ignoring the situation.

This really is interesting to watch. Gas is below $2 here in Atlanta. Never thought I would see that again.

[SSLance]

My wife bought some KMI at $22.50... She's usually a good luck charm and I figured that would do the trick. :D

Strangely enough, I'm alright with my KMI and ETP being down 50% as well. I got caught in a similar situation in 2008-2009 with my high yield tax free muni bond funds. Their asset value got hammered because their insurers were tied to the mortgage defaults...when they really didn't have anything to do with the mortgage crisis at all.

Back then, I bailed from them at the bottom and went big into equities...and that paid off fantastically...but they were like 75% of my total portfolio. The two mentioned above are (or should say "were") just over 10% of my portfolio now.

I think (hope) this is just another case of Mr Market throwing out the baby with the bath water, mix in a little tax loss selling and bam...this is what you get.

[toy71camaro]

I'll be keeping an eye on this one. I've been considering KMI for a long time to get a stake in the Oil/NG systems. Now might be a good time to stake a small claim of it.

[SSLance]

There's the hammer...

Kinder Morgan whacks dividend by 75%
Dec 8 2015, 17:11 ET | About: Kinder Morgan, Inc. (KMI) | By: Carl Surran, SA

Kinder Morgan (NYSE:KMI) -7% AH after announcing a 75% cut in its 2016 quarterly dividend to $0.125/share ($0.50 annually) from the current $0.51, the company's first-ever dividend cut.

KMI says the move enables it to use a significant portion of its cash flow to fund the equity portion of its expansion capital requirements, eliminate any need to access the equity market for the foreseeable future, and maintain a solid investment grade credit rating."This is in the best long term interest of our shareholders,"

CEO Steven Kean tells WSJ. "It gives us the flexibility to fund our growth in other ways."The company will hold a guidance webcast tomorrow morning at 8:30 a.m.


It was already priced in, mostly anyway...I'm thinking the stock might just pick back up some steam now. Main complaint has been cash flow related, this stops that, right?

[GregWeld]

Well that's not the kind of news ANY dividend investor wants to hear -- and my guess is that the cut was well telegraphed to their largest shareholders -- thus precipitating the large volume of selling over the last 30 days.

I would not expect KMI to hold their dividend at this low level because their game plan has always been to share the cash flow with the shareholders. So we take our lumps - the shares are already hammered - and you wait for oil to come back. When the happens is anyones guess.

Now you know why there are "rules" about limiting investments to 5% or so of your portfolio !!! This is classic. If you only hold 5% - it's just not that big of a deal. If it's 50% of your portfolio it is!

[ironworks]

There's the hammer...

Kinder Morgan whacks dividend by 75%
Dec 8 2015, 17:11 ET | About: Kinder Morgan, Inc. (KMI) | By: Carl Surran, SA

Kinder Morgan (NYSE:KMI) -7% AH after announcing a 75% cut in its 2016 quarterly dividend to $0.125/share ($0.50 annually) from the current $0.51, the company's first-ever dividend cut.

KMI says the move enables it to use a significant portion of its cash flow to fund the equity portion of its expansion capital requirements, eliminate any need to access the equity market for the foreseeable future, and maintain a solid investment grade credit rating."This is in the best long term interest of our shareholders,"

CEO Steven Kean tells WSJ. "It gives us the flexibility to fund our growth in other ways."The company will hold a guidance webcast tomorrow morning at 8:30 a.m.


It was already priced in, mostly anyway...I'm thinking the stock might just pick back up some steam now. Main complaint has been cash flow related, this stops that, right?

I'm kinda confused how this is a good thing for dividend investing. I get how this is a good thing for Growth for the stock but does this change anyone's opinion?

I'm so far up side down in my shares there is no reason to quit now. But is now a good time to think about buying back my cost basis.

[GregWeld]

I'm kinda confused how this is a good thing for dividend investing. I get how this is a good thing for Growth for the stock but does this change anyone's opinion?

I'm so far up side down in my shares there is no reason to quit now. But is now a good time to think about buying back my cost basis.



No --- wait until we can see the light in this name. Otherwise it becomes gambling just based on "I own it so it will come back". We don't know that now. We can wait for a change of prices and we can ALWAYS buy more.

[GregWeld]

I'm kinda confused how this is a good thing for dividend investing. I get how this is a good thing for Growth for the stock but does this change anyone's opinion?

I'm so far up side down in my shares there is no reason to quit now. But is now a good time to think about buying back my cost basis.



Separate response for a separate question:



5 years ago (or so) all the banks cut, or quit completely, paying any dividend. GM went completely broke... Ford quit paying a dividend. This happens from time to time when you have a complete breakdown in something beyond normal control. In this case - we have a world using less of a commodity - and we have foreign countries determined to put the USA oil production out of business. We have no control - nor do the companies swept up in the debacle.

GM is doing fine - Ford is doing fine - Banks have recovered and are now paying dividends. My point is - wait - and things will change.

[Ghiaguy]

The Saudis have a welfare state and depend on selling oil to prop up the government -- was a great article in the LA Times (I think, I read too much to remember where I saw it LOL) on it over the weekend, it was kind of tied into the shootings in San Bernardino and how the Saudis have now got a tiger by the tail in the Sunni Wahabi radicals, which is the state religion there.......

http://www.differencebetween.net/language/difference-between-sunni-and-wahabi/

So now we have 3+ heads to the monster lol

[Ghiaguy]

An Article on the 8 best dividend stocks for this year

http://www.msn.com/en-us/money/savingandinvesting/the-dows-8-best-dividend-stocks-of-2015/ss-BBncKK7

[WSSix]

For now, my opinion of KMI is staying the same. Since I am long term, what should hopefully turn out to be a temporary cut in the dividend doesn't bother me. Their business is strong and on track for continued growth. They are still paying a good dividend, too. So to me, this isn't things aren't going well for the company. It's people upset that things aren't going as well as they want them to. We'll see if this continues to hold true in the coming quarters. If so, it may be a good time to be buying more shares.

[GregWeld]

For now, my opinion of KMI is staying the same. Since I am long term, what should hopefully turn out to be a temporary cut in the dividend doesn't bother me. Their business is strong and on track for continued growth. They are still paying a good dividend, too. So to me, this isn't things aren't going well for the company. It's people upset that things aren't going as well as they want them to. We'll see if this continues to hold true in the coming quarters. If so, it may be a good time to be buying more shares.



I consider KMI as being in a "collateral damage" situation - one that nobody could foresee.... nor could prepare for. Oil and everything it touches is taboo for now. I just hope it's only 2 or 3 years. That's not very long. The housing debacle now seems light years ago...

[GregWeld]

Since this thread was started -- we lived in a market that pretty much just went UP day after day. I commented repeatedly during that period to have people remember what that all felt like.... It was SO EASY to just buy something and have it go up - making you feel like the smartest guy in the world.

The reason I reminded people about this - and the possible FED interest rate hikes - is because I've lived thru many periods such as we've been in the last 6 months to a year. Down - what I call "the death of a 1000 cuts".... markets just dripping away. You start to really question WTF you're doing.

This is where LONG TERM thinking comes into play! What's that look like? We have no friggin' idea.... but I'd ask you to take a look at any of your holdings longer term chart and start to see the DIPS instead of just the higher price... There's ZILLIONS of them!! But - when you smooth all of that out - the longer term is higher. Right now - everything SUCKS!

Be like me - don't be in a hurry to be buying right now. Just plug away - have your dividends reinvested. When you have extra money - don't be afraid to put it to work - but don't be a pig and try to buy a whole bunch of one thing (say "oil" just because you're 100% positive it's going to come back). Doing that will just bring more short term pain and have you reeling and thinking you're a lousy stock market investor. Just stay steady. Continue to buy when you're ready - continue to diversify - continue seeking dividends. You will be rewarded.

[ErikLS2]

So yesterday a mutual fund company, Third Avenue Management announced it would not allow withdrawals from a high yield (junk) bond fund saying something like it could not find enough buyers for the assets in the fund which were needed to raise the cash to pay the investors who wanted out. They have not said when they will give investors their money. This is the first time I believe in history that a mutual fund has blocked withdrawals.This is going to motivate other investors in high yield debt investments to want their money I'm sure. I hope this one doesn't get out of hand.

Today Stone Capital Partners, a hedge fund and bound by different rules than a mutual fund, also suspended withdrawals in its credit hedge funds. They also didn't say when investors' money will be returned, which is only going to make more of them want their money. A hedge fund hasn't done this since the financial crisis.

And off to the races we go.......possibly. Monday is going to be interesting for sure.

[68Cuda]

Just stay steady. Continue to buy when you're ready - continue to diversify - continue seeking dividends. You will be rewarded.

Yep. Have been following the thread for a while, I have not looked at my 401k/brokerage account in a month so I guess I will take a peak. I am not GW, I do not make that kind of cash and do not have millions socked away. I am just a guy who works too much and who has to watch the household budget and hopefully will get some time and money to do some work on the car again soon.

OK, so my progress to date assessment:

BP is my solo oil stock... I have "lost" 18% since I bought it a year ago, since it is about 4% of my holdings, no big deal. Besides at the current price the dividend rate (assuming they do not cut it) is about 7.5%.

I have been following the general concept of "Dogs of the Dow" for about 5 years now. I just apply it to the market as a whole, not just the DOW, and I typically do not sell as they suggest to rebalance, I just add new stuff as more money trickles into the 401k. I have sold a few that I thought were too volatile, or were at a high point and seemed overvalued to me. But, for the most part it has been buy, hold, and re-invest the dividends. My personal threshold is I won't look at a stock that pays under 3%. I generally look for stocks with a long history of dividend payments and growth (like PG for example) that usually pay just over 3% but for some unexplained reason are paying 4% (or close to that, depends on the company). Sometimes the market moves a group of stocks and a good stock drops because its neighbors do, not because it really deserves to. Then, over the course of a year it "corrects" by raising its price until the dividend is back to 3. Maybe I am being to simplistic, but it has worked for me so far. I also do not invest in products or companies I do not understand, just not comfortable buying them.

Since I started this strategy in 2011 with my E-Trade IRA account and my work "401k Brokerage account" the total balance of my retirement accounts has literally doubled in value. I did not buy any superstar stocks or anything exotic. Here is a list of my core group, the who's who of boring: KMB, PG, BP, CAG, GE, JNJ, MO, MRK, NUE, VZ, WM. My big loser along the way was BAC, just cut my losses on that one. My biggest "short term" gainer was owning INTC for about a year and selling it. Other than that, most of these stocks I have owned since 2011 and have made other small purchases along the way as money trickled in from my 401k contributions. About 15% of the value increase was contributions, the rest was growth and the automatic dividend reinvestments.

Maybe some of that was just luck because the whole market has gone up, but, even if the market stays flat the next 4-5 years I will still be getting my dividends on all these stocks and growing my base. I also have the HUGE advantage that this money is all in tax deferred accounts, so my "realized "gains and dividends are not taxed every year. This way the growth is not hampered. I will have to pay income tax when I withdraw the money 20+ years from now, but no payroll taxes on that money.

[GregWeld]

You've got this down pat Michael!! Good for you. It's so simple if you keep it simple.








Yep. Have been following the thread for a while, I have not looked at my 401k/brokerage account in a month so I guess I will take a peak. I am not GW, I do not make that kind of cash and do not have millions socked away. I am just a guy who works too much and who has to watch the household budget and hopefully will get some time and money to do some work on the car again soon.

OK, so my progress to date assessment:

BP is my solo oil stock... I have "lost" 18% since I bought it a year ago, since it is about 4% of my holdings, no big deal. Besides at the current price the dividend rate (assuming they do not cut it) is about 7.5%.

I have been following the general concept of "Dogs of the Dow" for about 5 years now. I just apply it to the market as a whole, not just the DOW, and I typically do not sell as they suggest to rebalance, I just add new stuff as more money trickles into the 401k. I have sold a few that I thought were too volatile, or were at a high point and seemed overvalued to me. But, for the most part it has been buy, hold, and re-invest the dividends. My personal threshold is I won't look at a stock that pays under 3%. I generally look for stocks with a long history of dividend payments and growth (like PG for example) that usually pay just over 3% but for some unexplained reason are paying 4% (or close to that, depends on the company). Sometimes the market moves a group of stocks and a good stock drops because its neighbors do, not because it really deserves to. Then, over the course of a year it "corrects" by raising its price until the dividend is back to 3. Maybe I am being to simplistic, but it has worked for me so far. I also do not invest in products or companies I do not understand, just not comfortable buying them.

Since I started this strategy in 2011 with my E-Trade IRA account and my work "401k Brokerage account" the total balance of my retirement accounts has literally doubled in value. I did not buy any superstar stocks or anything exotic. Here is a list of my core group, the who's who of boring: KMB, PG, BP, CAG, GE, JNJ, MO, MRK, NUE, VZ, WM. My big loser along the way was BAC, just cut my losses on that one. My biggest "short term" gainer was owning INTC for about a year and selling it. Other than that, most of these stocks I have owned since 2011 and have made other small purchases along the way as money trickled in from my 401k contributions. About 15% of the value increase was contributions, the rest was growth and the automatic dividend reinvestments.

Maybe some of that was just luck because the whole market has gone up, but, even if the market stays flat the next 4-5 years I will still be getting my dividends on all these stocks and growing my base. I also have the HUGE advantage that this money is all in tax deferred accounts, so my "realized "gains and dividends are not taxed every year. This way the growth is not hampered. I will have to pay income tax when I withdraw the money 20+ years from now, but no payroll taxes on that money.

[GregWeld]

Investors in these funds must be complete idiots..... Surely (don't keep calling me Shirley) The FED has been telegraphing it's going to raise rates... when isn't exactly certain - but there's no question it WILL happen. So to be in a junk bond fund -- or JNK or HYG -- knowing we're getting closer and closer to that "event" --- and then deciding NOW is the time to sell..... HELLO..... IDIOTS.


We all got caught with our pants down on the big and sudden oil price decline. This kind of thing happens from time to time. But not knowing that interest rate rise will affect your holdings is just plain being stupid.







So yesterday a mutual fund company, Third Avenue Management announced it would not allow withdrawals from a high yield (junk) bond fund saying something like it could not find enough buyers for the assets in the fund which were needed to raise the cash to pay the investors who wanted out. They have not said when they will give investors their money. This is the first time I believe in history that a mutual fund has blocked withdrawals.This is going to motivate other investors in high yield debt investments to want their money I'm sure. I hope this one doesn't get out of hand.

Today Stone Capital Partners, a hedge fund and bound by different rules than a mutual fund, also suspended withdrawals in its credit hedge funds. They also didn't say when investors' money will be returned, which is only going to make more of them want their money. A hedge fund hasn't done this since the financial crisis.

And off to the races we go.......possibly. Monday is going to be interesting for sure.

[WSSix]

Congrats Michael! Glad to hear it's working out for you.

[GregWeld]

I would HOPE that most of you are seeing the beauty of having a diversified portfolio - sprinkled with some "steady Eddies"... And that while it's always fun to own a couple of the "hot stocks" when they're going up - they suck when the market goes against you. Of course OIL and related *was* or could have been considered to be a steady Eddie - that has changed - and now we'd probably call these 'home wreckers'.... LOL

It's easy to be discouraged and stress over the ones that are killing you - rather than seeing your portfolio as a pot with a mix of goodies in it. In other words - rather than stressing over the one or two that suck - and how badly they're doing (% wise) - it's better to focus on your overall financial health... and to look at the total of $ invested and what percentage that number is up or down.

The guys that held McDonalds (MCD) have seen that holding go from suckola to hero status in just a few months.... Altria (MO) has been stellar... Oil sucks and it WAS stellar... this is a natural ebb and flow... and when you get it 100% right (where all your holdings are green) let me know - because in 30 years I've yet to have that.

[ErikLS2]

... and when you get it 100% right (where all your holdings are green) let me know - because in 30 years I've yet to have that.

Ok, I'm certainly not bragging here but thought I'd share what a little common sense (learned here mostly), some research and a little Jim Cramer here and there can do. This is short term of course but still good compared to the S&P 500, it's up 11.59% since Oct 2014. This is my first venture into individual stocks and with all of these I am either very impressed with their product or visit them regularly. They all pay a dividend (all are reinvested) except for UA. I just hope the great investing gods will not come down on me and jinx this now (knocking on wood all over the place) but so far so good.

Stock Purchase Date Total Return

CVX 9/2/2015 19.08%

COST 9/17/2015 12.93%

HD 9/17/2015 12.18%

KR 9/17/2015 13.63%

SNA 10/20/2014 39.18%

LUV 10/21/2014 30.19%

UA 10/20/2014 27.55%

DIS 9/17/2015 9.02%

WFC 9/17/2015 (half) 2.55%
11/18/2015 (other half)

Total 20.96%

I also have one mutual fund that I've had a long time, POAGX, which I initially invested in on 4/26/2007, it's up 95.83% since then and beats its peer index by almost double so I keep it.

[GregWeld]

FRIGGIN' FANTASTIC ERIK !!!!!!



I bow in your direction!



I was being factitious when I said I'd never had all green.... because, of course, there are periods (such as the last 4 or 5 years) where not only have we had all green - but where we've had all green for months or even years. It's RARE to have such bull markets... and that was more my point. HOWEVER - to have your string - in the current market - being a fresh investor is just stellar!



I remind people daily (you'd be shocked how many calls and emails and texts I get) "look at the long term charts of the companies you own" when the days turn against you. Understand WHY a name or two you own might be in the dumper i.e., is it because of bad product - bad press - bad management or is it in a sector that for right now SUCKS?! The key here is to know WHY. When you know why - then you can make proper decisions.











Ok, I'm certainly not bragging here but thought I'd share what a little common sense (learned here mostly), some research and a little Jim Cramer here and there can do. This is short term of course but still good compared to the S&P 500, it's up 11.59% since Oct 2014. This is my first venture into individual stocks and with all of these I am either very impressed with their product or visit them regularly. They all pay a dividend (all are reinvested) except for UA. I just hope the great investing gods will not come down on me and jinx this now (knocking on wood all over the place) but so far so good.

Stock Purchase Date Total Return

CVX 9/2/2015 19.08%

COST 9/17/2015 12.93%

HD 9/17/2015 12.18%

KR 9/17/2015 13.63%

SNA 10/20/2014 39.18%

LUV 10/21/2014 30.19%

UA 10/20/2014 27.55%

DIS 9/17/2015 9.02%

WFC 9/17/2015 (half) 2.55%
11/18/2015 (other half)

Total 20.96%

I also have one mutual fund that I've had a long time, POAGX, which I initially invested in on 4/26/2007, it's up 95.83% since then and beats its peer index by almost double so I keep it.

[WSSix]

Congrats Erik!

[GregWeld]

So let's talk about "averaging down" --- even though this strategy has been mentioned a zillion times in this thread.... now might be a good time to bring it up again. Particularly as related to OIL and OIL RELATED holdings.

When you're entering a situation where the results are an unknown... such as we are with Oil. And that situation is not under any kind of control - in other words - the market isn't stable and continues to be a volatile and fluid situation regarding the over supply (Thanks to Saudi Arabia)... There is no reason to RUSH to average down or to buy on the dips or to load up the boat with names in this sphere. It's simply time to keep your antenna up.

By that I mean - if you already own this stuff, you have what's going to be called "dead money". Dead money can be resuscitated - but that's going to take some intervention. So until you can see some intervention - there's no reason to rush to own more just because you "think" there's aid on the way. You'll be better served waiting until such aid is on the scene and you KNOW what you're dealing with.

Patience is what I'm saying here. Don't be quick to just load up on more just because it looks good on paper - or because you'll think you're smart to buy some of these great names "cheap" (cheaper than where you bought them). THEY CAN GO LOWER. I prefer to put my money into something that's not in turmoil... and wait until there's some signals that say "all clear". THEN you have plenty of time to average down your position.

We can't see clearly (YET) where this is all going to play out. KMI - ETP - CVX - XON etc just to toss some names out there... They look cheap right now - but we maybe have yet to see the damage surface. So why stand on the tracks of the train? Just stand a little bit to the side and see if the things has brakes.

I'm not saying to sell - I'm saying to just sit a bit (months or maybe a couple years) and let em lay... all the while watching and waiting for better news and then you can pounce.

Some would advocate for taking the loss and moving on... But I don't think this "space" (oil et al) is going to zero... I just think we're in a political war with Saudi Arabia trying to bury our industry in a market share grab. The thing that happens along the way when stuff like that happens is it forces companies to change or find a better way or whatever.... and all of a sudden - BINGO.... we figure out how to pump oil cheaper and become profitable at the lower selling prices. They'll do that half an hour after you sell and lock in your loss. LOL

[ironworks]

Being on some what of the front lines of the oil I can say that things aint gonna get any better soon. Another big company is laying of 82 more guys next month.

And the market is getting bad enough that the companies are laying off good employees now. Not just the lazy worthless ones. I have picked up some really solid guys in the past 3 months I had no idea even existed.

But oil companies are bracing for this to not change till 2017. One customer I have sells electrical items and in 2014 they had a working budget of 160 million for maintenance and improvements. They have gone to zero in 2016.

If oil goes to 65 to 70 per barrel things will be just fine, maybe not as good as it was at 110. One local field makes money at 12 bucks per barrel.

[GregWeld]

All the discussion about "oil and related".... most of them in the dumper... there are a couple that aren't, but basically this "group" is horrendous...

This is EXACTLY why I love and would remind you all - to keep a decent portion of your investments in the steady eddies. Build your base around them. Once you have your good base - then you stretch your wings and grab a couple high fliers. While they're never the hot darlings - or the water cooler bragging rights... they - for the most part - pay decent percentage of dividends and, while they don't go up quickly - they don't go south quickly either. Do they go up and down -- sure! But they generally do so with the market.

[glassman]

Man, soo true. My gut wants me to keep "putting in" oil, but "catching the falling knife" is the analogy that keeps coming too mind....

Since i don't know much (at all) about tech, what about an ETF for tech stocks? and opinions? and is ETF the right "term"...?

[GregWeld]

Man, soo true. My gut wants me to keep "putting in" oil, but "catching the falling knife" is the analogy that keeps coming too mind....

Since i don't know much (at all) about tech, what about an ETF for tech stocks? and opinions? and is ETF the right "term"...?



ETF is "Exchange Traded Fund" -- so any ETF is basically a basket of stocks that represent whatever the ETF purports to represent. There's a zillion ETF's representing just about every and any segment you'd want to buy "blindly". I say blindly - because just like Mutual Funds - these ETF's own so many names in the funds that you're results get pretty diluted. I don't do ETF's.... I'd rather just look around and pick one or two good names and invested in them.

Tech to me is a wide cross of "things" to invest in... there's software names - hardware names - hybrids.... and then - while it's "tech" what is it really? Names like FaceBook? Is it "tech" or what?

For me - I'd stick to the biggest of the big. Apple - Microsoft - FaceBook - Alphabet (Google) - NetFlix etc. The reason for that is personal -- I can't keep up with all that is happening in the space that is "tech". I'm too dumb to spot the up and comers -- and it's such a broad field with just way too much information.

Speaking of Tech -- is Amazon "tech" or is it "retail"?? I lump this in the hybrid class --- because it's some of both. It's another one I'd own if I didn't rely so heavily on dividends. Personally I buy EVERYTHING from Amazon that I can.... but I don't own the stock.


If you want an ETF --- you could start poking around here --- because there's so many and they're all different!! OMG!! You want an internet ETF - bingo! You want a social media ETF - oh sure - got it! LOL


http://etfdb.com/etfdb-category/technology-equities/

[SSLance]

I think that some of you reading this own Chipotle...and we've discussed the store here several times. I read this next story this morning and laughed out load at first...then started to think about it and how things like this I guess are possible and it is just another indication of no matter how well things may be thought out or are going, something can come completely out of left field and screw up ones investing plans...

http://www.naturalnews.com/052405_Chipotle_ecoli_outbreak_corporate_sabotage_ biotech_bioterrorism.html


ANALYSIS: Chipotle is a victim of corporate sabotage... biotech industry food terrorists are planting e.coli in retaliation for restaurant's anti-GMO menu

[GregWeld]

I think that some of you reading this own Chipotle...and we've discussed the store here several times. I read this next story this morning and laughed out load at first...then started to think about it and how things like this I guess are possible and it is just another indication of no matter how well things may be thought out or are going, something can come completely out of left field and screw up ones investing plans...

http://www.naturalnews.com/052405_Chipotle_ecoli_outbreak_corporate_sabotage_ biotech_bioterrorism.html


ANALYSIS: Chipotle is a victim of corporate sabotage... biotech industry food terrorists are planting e.coli in retaliation for restaurant's anti-GMO menu




Too funny!




The key to investing and staying invested - is not to own too large of a position in anything - because things DO and WILL happened from time to time that come from out of nowhere. This is why diversity is always preached - and not to get too piggish.... and all the other little "wisdom" sayings are created over the years. Just when you think you have it all figured out.... BAM! You feel like a fly under a fly swatter. LOL

[LuxurySportCoupe]

Hey guys, I found this forum a while back because I want to learn as much as possible about making cars handle (I'm realizing there's more to life than a straight line.) And this forum rocks, especially this thread.

That being said, without reading all 500+ pages of this post (I've read the first 7 or 8 and the most recent 3 pages or so), I have a few questions.

I'm 25 years old and just purchased my first home. I've got a 15 year mortgage on it (3.25% interest), but I've got enough money left over every month to put extra toward the principle, and get it paid off in 6 years or so. Would it be a better idea to take that chunk of money every month, and invest it in a bunch of "steady eddies" to put my money to work for me, instead of just giving it to the bank?

[SSLance]

First off, for being 25 years old with a mortgage like that on your first house...I gotta give you props. Nice work!

In a general sense, I'd rather pay off debt first before investing as debt is like an anchor tied around your leg. But Mortgage debt (especially a nice note like you have) is the best kind of debt to have if you have to have any.

Do you have any other consumer debt that needs to be paid off? Student loans, car loans, credit card balances? If so, I'd work on paying those down first and foremost.

If not...how long do you plan on staying in the house you are in now? Long term or starter home? Paying that principle down quicker will make it easier to build equity to parlay forward toward your next home.

That said, it's never too early to start saving for retirement and putting money into an investment account and getting started on a couple Steady Eddies is a great way to start. Just be prepared to put that money to work for a long time, don't look to be using it as an ATM a couple years down the road.

[68Cuda]

I'm 25 years old and just purchased my first home. I've got a 15 year mortgage on it (3.25% interest), but I've got enough money left over every month to put extra toward the principle, and get it paid off in 6 years or so. Would it be a better idea to take that chunk of money every month, and invest it in a bunch of "steady eddies" to put my money to work for me, instead of just giving it to the bank?

The way I look at it if you have tax deferred savings, yes, otherwise no. Tax deferred, like 401k and IRA allow your money to grow without incurring taxes on the gains every year. Taxes eat into your gains. If the stock value increases you do not have tax liability until you sell. Dividends, on the other hand, are income. And, in the beginning, it is taxed like regular income. Long term gains are taxed at the capital gains rate. My brokerage account keeps track of it for me and sends me the appropriate tax documents. The taxes can get complicated, but suffice it to say it reduces your overall gains.

Long story short, I am currently paying into my 401k 1st, debt 2nd, and then when the debt is down I will put money into the brokerage account again. Reason is the taxes on the gains of the brokerage account for "steady eddie" type investments make the return not worth it compared to the cost of the debt.

If you have goals that require you to zero your debt before you move on, then at the very least add into your 401k (if you have one) at least as much as the employer matches (if this applies to you). I take issue with turning away "free" money if your employer has such a program. Assuming you are not self employed - which in that case I am mostly envious of your position.

[Vegas69]

My preference is balance. A 15 year note is a strong attack on your mortgage debt. I'd like to see you start putting money into a Roth IRA and then playing around with some good performing individual stocks.

The key to wealth: Invest your money and spend what's left, not the OPPOSITE. Put your investments on autopilot. That means auto withdrawal from you checking account. You can do that with individual stocks by allocating X amount of money a month into your trade account to invest. Have a real balance sheet. Take you monthly net income and expenses and analyze them. Where can you wittle down your expenses?

With all that said, don't forget to have fun along the way. Sometimes we need to put our nose to the grind stone, but without some fun, it will eventually fizzle out.

Good luck!

[ErikLS2]

Like the others have said, that interest rate on a 15 yr mortgage is killing it already, if you don't have any credit card debt DON'T get any and start a Roth IRA, I have accounts at both Schwab and Fidelity and both offer outstanding service. If you do have credit card debt, pay that off first and then don't acquire any more.

Another way to look at paying down your mortgage is whatever extra you pay on it you are effectively earning 3.25% interest on that money. If you aren't paying the interest it's the same as earning it really. At your age you should be taking enough risk that long term you can do much better than that.

[Vegas69]

Personally, I do want to be mortgage free within 5 years regardless of interest rates. Many have large mortgage debts with substantial monthly interest that far outweighs the size of their investment portfolio. (This is the typical American) Once that large debt is gone, you can really get serious about investing. I like to invest 15% of my gross income every month. Once my mortgage debt is gone, I can increase that number dramatically. It also provides more freedom for a career change or more time off with your family. Those are two major driving forces for me to get debt free.

We all have our unique set of values and circumstances. The key is to have the vision and plan that goes with it.

Merry Christmas fellas...

[LuxurySportCoupe]

Merry Christmas, and thanks for the quick responses guys. To answer some of your questions, the mortgage is my only debt, I have no credit card debt or car payment. (I paid 3k for my DD back in '08, and it gets me to work just as well as a new car, lol.) I plan on living in this house for life as well. I do have a Roth IRA already, but I've been slacking on putting money in it on a consistent basis. Vegas you make a good point about career flexibility. The way I look at that, is if the sh*t hits the fan at work, and I end up having to move out of town to find work, it's better to have my place paid off, rather than having to scramble to sell,and subsequently taking a loss.

Long story short, I'll start putting a good chunk into my Roth every month, and maybe shoot for 8 or 9 years to pay the house off rather than 6.

[GregWeld]

All "investments" and life style choices are individual - and there is no real right or wrong way. Better to say that there are MANY ways to do things and all can be right. Depends on the goals and where people are at in life etc.

At 25 - with a very low % mortgage.... I'd look at your house just like I'd look at any other investment..... in other words - don't put all your eggs in one basket. #1 - you have a short term mortgage. #2 - You're young. #3 - You have a great rate in a rising interest rate environment.

So - there are other considerations to be taken into account here. Your income tax rate. Your job stability. Your life situation stability.

Your mortgage interest is tax deductible --- therefore your real rate of interest is actually LESS than the face value.... because it's helping you avoid taxes. That's a good thing.

Your job stability at your age is a critical piece - because you don't want to end up with huge "equity" in your house - and be short of cash and investments should something change and you need to live for awhile without a steady income. So I would consider stashing some CASH savings first. Whatever that looks like for you. Maybe 6 or more MONTHS of living expenses, including our normal house payment and utility bills and that sort of thing. That way - come hell or high water - you'd have at least 6 months to find another job - or sell your home to relocate etc. I'd suggest that you're in a sweet spot right now - but 7 years from now - who knows what can change!


Once you have your emergency cash stash..... which gives you peace of mind and protects you from downside events out of your control.... THEN you should start to save for investments. Keep reading the thread so that you know what kind of investments you'd like to get into = how they work - and all the other things we write about here. Yes there's 500 pages --- keep plugging away at them while you're saving your emergency fund. I know that at 25 there is nothing "emergency" in your life.... but trust me -- just do it. You'll see why in a minute.

Let's say it takes you a little over a year to get the emergency cash built up to where you're happy with it. Now you start working on saving another 5 grand to buy some investments.... in the meantime you're now another 2 years into your 15 year mortgage.... You begin to buy in to some investments - and when you have 10 grand into your investments --- NOW you can invest your emergency funds -- because you'll no longer need them. You'd have plenty of reserves for an emergency... and you'll have fewer years left on your mortgage. Now you're earning dividends on your investments and you're still getting your tax deduction. All is good. Keep it up. You'll be retired early and loving life.

[ErikLS2]

Great point about the emergency fund of 6 months expenses, I totally spaced that one. My points were all assuming we don't lose the home mortgage interest deduction which some are talking about. I doubt we'll see it go away but if it does it will change things a bit.

[GregWeld]

Great point about the emergency fund of 6 months expenses, I totally spaced that one. My points were all assuming we don't lose the home mortgage interest deduction which some are talking about. I doubt we'll see it go away but if it does it will change things a bit.



Having "downside cash" is the most overlooked savings - and probably the absolute most important one. **** happens these days. Plants get bought and closed - economic risks abound with our government(s) - Markets can, and do, implode suddenly! Take the '08 market drubbing.... it came when we were all on a housing high.... suddenly almost overnight there were financial businesses closing - GM went broke - the dang government almost went broke. None of this was the fault of our own conservative investments!!! Many of us were doing everything right! But here you are - caught up in it. So having a few months of reserves so that you aren't forced to sell stuff at a loss.... or if you manage to survive intact... you might be able to take advantage of some real bargains with that cash! Mostly - it allows freedom of choice and peace of mind and costs very little compared to what it can 'save'.

[ErikLS2]

So I went to see The Big Short last night, highly recommend it, whether you really understand the financial crisis or not. And if you don't you will after seeing it. Also Google "bespoke tranche opportunity". The big bank a-holes are at it again it appears!

[Vince@Meanstreets]

So I went to see The Big Short last night, highly recommend it, whether you really understand the financial crisis or not. And if you don't you will after seeing it. Also Google "bespoke tranche opportunity". The big bank a-holes are at it again it appears!

come on bubble pop!!!

[GregWeld]

I never short anything.... that's for big money boys with big money to loose and inside info or in depth info.

As soon as you think you are 100% certain of the direction of a company - you get swatted like a fly. Better to invest in companies you feel are growing and doing fine. It's not as exciting... but we're investing not gambling. Gambling is best done in Las Vegas.

[slow4dr]

Always a good read in this thread.

It's been a while since I've checked in so I figured I'd post an update. My Real Esate (rental) plans changed this year. The house we bought for our primary residence a few years back had appreciated enough to sell, cash out and pay off our rental plus have some extra to invest. It wasn't a decision made overnight but our long term, very good renter put in their notice so the timing was perfect.

The sell of the house took a little longer than expected and we had many sleepless nights. We ended up getting asking price(minus $5K in closing) even though we had lots of competition in our price range. The 45 day escrow ending up being about 65 with delay after delay. Finally, we closed and got funded.

We moved back into the rental house which is now paid off. We had lived in this house for 10 years previously. We always considered it to be our "Forever Home" so it was an easy transition. I am pretty excited to have my shop back too. It's got a 800 sq ft shop with 11' ceilings and A/C.

Old pic
http://i41.photobucket.com/albums/e260/slow4dr/103_1001.jpg (http://s41.photobucket.com/user/slow4dr/media/103_1001.jpg.html)


On paper, this financial move is only about a $400 swing in our favor. Which will dwindle considering no longer having the mortgage & rental writeoffs. Although, I think my stress level will be much less without the rental.

I know there is still a chance of going through this whole process again in the future. When the time comes we'll be confident in our ability to make it happen after learning so much this first time around. If the housing bubble pops again we'll be ready to pounce.

[Vince@Meanstreets]

Always a good read in this thread.

It's been a while since I've checked in so I figured I'd post an update. My Real Esate (rental) plans changed this year. The house we bought for our primary residence a few years back had appreciated enough to sell, cash out and pay off our rental plus have some extra to invest. It wasn't a decision made overnight but our long term, very good renter put in their notice so the timing was perfect.

The sell of the house took a little longer than expected and we had many sleepless nights. We ended up getting asking price(minus $5K in closing) even though we had lots of competition in our price range. The 45 day escrow ending up being about 65 with delay after delay. Finally, we closed and got funded.

We moved back into the rental house which is now paid off. We had lived in this house for 10 years previously. We always considered it to be our "Forever Home" so it was an easy transition. I am pretty excited to have my shop back too. It's got a 800 sq ft shop with 11' ceilings and A/C.

Old pic
http://i41.photobucket.com/albums/e260/slow4dr/103_1001.jpg (http://s41.photobucket.com/user/slow4dr/media/103_1001.jpg.html)


On paper, this financial move is only about a $400 swing in our favor. Which will dwindle considering no longer having the mortgage & rental writeoffs. Although, I think my stress level will be much less without the rental.

I know there is still a chance of going through this whole process again in the future. When the time comes we'll be confident in our ability to make it happen after learning so much this first time around. If the housing bubble pops again we'll be ready to pounce.

:thumbsup: congrats

[GregWeld]

Always a good read in this thread.

It's been a while since I've checked in so I figured I'd post an update. My Real Esate (rental) plans changed this year. The house we bought for our primary residence a few years back had appreciated enough to sell, cash out and pay off our rental plus have some extra to invest. It wasn't a decision made overnight but our long term, very good renter put in their notice so the timing was perfect.

The sell of the house took a little longer than expected and we had many sleepless nights. We ended up getting asking price(minus $5K in closing) even though we had lots of competition in our price range. The 45 day escrow ending up being about 65 with delay after delay. Finally, we closed and got funded.

We moved back into the rental house which is now paid off. We had lived in this house for 10 years previously. We always considered it to be our "Forever Home" so it was an easy transition. I am pretty excited to have my shop back too. It's got a 800 sq ft shop with 11' ceilings and A/C.


On paper, this financial move is only about a $400 swing in our favor. Which will dwindle considering no longer having the mortgage & rental writeoffs. Although, I think my stress level will be much less without the rental.

I know there is still a chance of going through this whole process again in the future. When the time comes we'll be confident in our ability to make it happen after learning so much this first time around. If the housing bubble pops again we'll be ready to pounce.



Great move!!!!


Now - let me ask you what you're going to do with the monthly payment you used to make - because in the long run - that decision will be the important one. In the sense of whether or not you just end up buying "stuff" (car payment etc) or you practice good finances and save most of it and invest it in "something".

I used to discuss "write offs" with my old accountant. His view was - If you make a dollar and you pay Uncle Sam 40 cents you still get to keep 60 cents.... If you spend a dollar to save 40 cents... which way will get you ahead?

[slow4dr]

Great move!!!!


Now - let me ask you what you're going to do with the monthly payment you used to make - because in the long run - that decision will be the important one. In the sense of whether or not you just end up buying "stuff" (car payment etc) or you practice good finances and save most of it and invest it in "something".

I used to discuss "write offs" with my old accountant. His view was - If you make a dollar and you pay Uncle Sam 40 cents you still get to keep 60 cents.... If you spend a dollar to save 40 cents... which way will get you ahead?

Great point.....spending will never get you ahead.

I won't lie, we've already splurged on a new couch and I plan to put some new LED lights up in the shop. After that though we will take money out of each pay check and set it aside. I don't want to get analysis paralysis but I plan to take my time and research and finally take a dive into dividend stock shopping.

[SSLance]

I used to discuss "write offs" with my old accountant. His view was - If you make a dollar and you pay Uncle Sam 40 cents you still get to keep 60 cents.... If you spend a dollar to save 40 cents... which way will get you ahead?

OMG! I've had that same conversation with so many people and it is amazing to me how many people just don't get it.

Fact...the only things that are really "write offs" are expenses that you never get back.

Even the depreciation write off typically doesn't work out because if you ever sell the depreciated asset, you have to reclaim every dollar that you had written off as regular income.

[GregWeld]

In markets like we are having or have been having the last few months.... you'll all discover the "comfort" from collecting dividends while you wait for the dust to settle.

These are the times when - if you're automatically reinvesting the dividend - that you actually want. WHY? Because those dividends are buying more shares... and that's how you get the snowball rolling!! Be happy! It will pay off. Trust me.

[markaaron80]

a lot of good info here

[GregWeld]

All the cash that is being pulled out of world markets -- will earn nothing (given the historically low interest rates) -- and will want to find a home (employees being put back to work). I know that I have over 4MM in cash in the account I use for discussion here. I won't try to catch a falling knife... I won't load the boat the minute I think we're headed higher... I'm patient. But that money is waiting to be put back to work.

Yields are RISING as stock prices go lower. I'm loving it.

[LuxurySportCoupe]

I finally got to the 100 page mark in this thread, and I didn't want to comment until I finished them all. But I got into a "discussion" last night on facebook that may be of interest to investing 102, or at least got me thinking about the effect on stock prices. The discussion was about people wanting to raise the minimum wage to $15 an hour (currently something like $8 here in Michigan). Since McDonald's has been mentioned a few times here, but it could apply to any retail/food company, I figured I'd ask, how do you guys think it would effect stock prices and dividend payouts? I would imagine dividend payouts would drop, at least initially, due to increasing costs, and therefore less profits. Not to mention the effects of every other sector that pays above minimum wage that may or may not give their employees a similar % increase in pay, and how much "disposable income" people in these sectors would then be willing to invest. If this becomes too political, feel free to delete it, the last thing I want to do is derail this thread. I just find it to be an interesting topic.

[sik68]

Food for thought. An article excerpt summarizing the market in 2015, from Liz Ann Sonders @ Schwab:


What drove performance … or lack thereof?

Remember, the S&P 500 is a cap-weighted index; and although it was about flat on the year, the average stock in the index did considerably worse—returning -3.8% according to Bespoke Investment Group (BIG), who took a look at what drove performance in 2015.

Market cap: bigger was better. The 50 largest stocks at the beginning of 2015 were up an average of 1.5% by year-end; while the 50 smallest stocks were down 11.9%.

P/E: growth was better. Price/earnings ratios were a factor, too; although perhaps not as you might think. The four deciles of stocks with the lowest P/E ratios (i.e., the cheapest stocks) were all down at least 5%; while the four deciles of stocks with the highest (or no) P/Es (i.e., the most expensive stocks) were all at least flat or up on the year.

Dividends: none or lower was better. For income-oriented investors, note that the decile of stocks which started the year with the highest dividend yields were down 14.6%, while the stocks which pay no dividends at all were up 3.9%.

Momentum: 2014’s winners won again. The top six deciles of stocks which did the best in 2014 all averaged gains in 2015. The 50 stocks which did the worst in 2014 were down another 28% in 2015. Buying the losers of 2014 was about as painful as it gets.

FANG stocks ruled. The “fab four” stocks, now nicknamed FANG—for Facebook, Amazon, Netflix and Google (now called Alphabet)—were up over 60% on a cap-weighted basis. Excluding those four stocks, the S&P 500 was down 4.8% last year.

It's a carazy market out there!

[GregWeld]

I finally got to the 100 page mark in this thread, and I didn't want to comment until I finished them all. But I got into a "discussion" last night on facebook that may be of interest to investing 102, or at least got me thinking about the effect on stock prices. The discussion was about people wanting to raise the minimum wage to $15 an hour (currently something like $8 here in Michigan). Since McDonald's has been mentioned a few times here, but it could apply to any retail/food company, I figured I'd ask, how do you guys think it would effect stock prices and dividend payouts? I would imagine dividend payouts would drop, at least initially, due to increasing costs, and therefore less profits. Not to mention the effects of every other sector that pays above minimum wage that may or may not give their employees a similar % increase in pay, and how much "disposable income" people in these sectors would then be willing to invest. If this becomes too political, feel free to delete it, the last thing I want to do is derail this thread. I just find it to be an interesting topic.



That's a very interesting question and has many many variables and sides to it. I don't know that anyone can say "this" will happen... or that something else will play out. I don't think we have any historical basis for such a large pay increase.

It's a good question -- and I don't really see a "political" discussion developing around it. It really is appropriate because it's a BUSINESS question - and it's also a FUNDAMENTAL change question.

[So Cal Camaro]

Yeah, will be watching for a while to see where this goes, waiting for stocks on my wish list to hit a good entry point....

[ErikLS2]

I finally got to the 100 page mark in this thread, and I didn't want to comment until I finished them all. But I got into a "discussion" last night on facebook that may be of interest to investing 102, or at least got me thinking about the effect on stock prices. The discussion was about people wanting to raise the minimum wage to $15 an hour (currently something like $8 here in Michigan). Since McDonald's has been mentioned a few times here, but it could apply to any retail/food company, I figured I'd ask, how do you guys think it would effect stock prices and dividend payouts? I would imagine dividend payouts would drop, at least initially, due to increasing costs, and therefore less profits. Not to mention the effects of every other sector that pays above minimum wage that may or may not give their employees a similar % increase in pay, and how much "disposable income" people in these sectors would then be willing to invest. If this becomes too political, feel free to delete it, the last thing I want to do is derail this thread. I just find it to be an interesting topic.

Personally I think if you're invested in good companies with, and this is key, GOOD management, it won't affect them much. Well managed companies weather storms like this all the time and will find a way to adapt and continue to run their businesses profitably. McDonalds, who I don't like, is putting in kiosks to order food from. My guess is those kiosks work for a bit less than the current minimum wage we have now.

[ErikLS2]

Yields are RISING as stock prices go lower. I'm loving it.

I would just remind everyone that this is the case if shares are actually bought at the lower prices. If you buy at a higher share price and it goes down, your yield doesn't go up. There are a lot of good 4% yields out there now right now.

I'm really thinking I shouldn't have posted away about my recent short term successes, might have jinxed myself. But, I do have some cash set aside for things like what is happening now, just sitting back and waiting it out for now. It's a little more than unnerving though that these first 4 days have never happened in history before though.

[GregWeld]

I would just remind everyone that this is the case if shares are actually bought at the lower prices. If you buy at a higher share price and it goes down, your yield doesn't go up. There are a lot of good 4% yields out there now right now.

I'm really thinking I shouldn't have posted away about my recent short term successes, might have jinxed myself. But, I do have some cash set aside for things like what is happening now, just sitting back and waiting it out for now. It's a little more than unnerving though that these first 4 days have never happened in history before though.




Yield is ALWAYS based on COST. The yield doesn't fluctuate (unless the dividend is cut -- or unless the divided is raised) on your cost basis.

There's many posts in here about calculating your yield.


NOW --- HERE'S the big reminder for the year!!!


Remember the saying "BUY LOW -- SELL HIGH" ?? I believe that buying LOW is the most important aspect of investing. Obviously - we never know if we are buying low at the time. This is purely a judgement call based on where you are mind set wise. Can you stomach the drops in prices AFTER you've bought? Are you able to buy MORE later if the price stays down or goes lower....

For the AVERAGE INVESTOR -- that is buying a relatively small number of shares at a time... I wouldn't worry about trying to figure out exactly when the market is low... Rather, I'd just buy at regular intervals and it should average out over time. The key is to be invested - and to stay invested.

[SSLance]

I'm in a bit of a quandary here... I have 11 holdings (12 if you count cash). Each of my 11 are currently valued at around 5% of my total except for 3 which are 2.5-3% of my total. As you can imagine, those 3 are oil related stocks.

So while looking to step in the market a bit more today, and balance the portfolio out...numbers say to pick up more of those 3 stocks. :D

Should I pay more attention to balancing my holdings back out...or add to those stocks that haven't got as beat up as the others? I still like and am holding XOM, ETP and KMI, I'm just not as enamored with them to keep on adding to them as much as I have already done during this slide.

I'm leaning toward adding 1% to the other 8 winners instead.

[CornHusker4Life]

I have 11 holdings (12 if you count cash). Each of my 11 are currently valued at around 5% of my total except for 3 which are 2.5-3% of my total.

Lance's post reminded me of a question that I have been wanting to ask. If Lance owns 11 stocks with each being 5% of his total wouldn't that be 55% total?

If I have $20,000 in the market and own 10 stocks with each having $2,000 value per stock my percentage is 10% per stock. How do I get down to 5% per stock without adding more stocks to get to 20 total stocks at 5% each =100%.

I hope this makes sense.

Thanks, Jarrod

[SSLance]

You forgot to add in my 12th holding... Cash... :D

[glassman]

Lance's post reminded me of a question that I have been wanting to ask. If Lance owns 11 stocks with each being 5% of his total wouldn't that be 55% total?

If I have $20,000 in the market and own 10 stocks with each having $2,000 value per stock my percentage is 10% per stock. How do I get down to 5% per stock without adding more stocks to get to 20 total stocks at 5% each =100%.

I hope this makes sense.

Thanks, Jarrod

jarrod, thats a good question, one that i'm interested in hearing the answer of, certain "common sense" things, i lack....

[slow4dr]

For the AVERAGE INVESTOR -- that is buying a relatively small number of shares at a time... I wouldn't worry about trying to figure out exactly when the market is low... Rather, I'd just buy at regular intervals and it should average out over time. The key is to be invested - and to stay invested.


It always seems like you're speaking directly to me. I moved funds to my just opened Roth IRA this week. I've been watching every single one of my stock picks go down each day this week so I've been hesitant to pull the trigger. These are going to be long term holdings and I chose them specifically with that intent so I just need to sack up and jump in.

[Vortech404]

To get your stocks to 5% your either going to have to increase
Your cash or buy more stocks in different company's.

John

[GregWeld]

Lance's post reminded me of a question that I have been wanting to ask. If Lance owns 11 stocks with each being 5% of his total wouldn't that be 55% total?

If I have $20,000 in the market and own 10 stocks with each having $2,000 value per stock my percentage is 10% per stock. How do I get down to 5% per stock without adding more stocks to get to 20 total stocks at 5% each =100%.

I hope this makes sense.

Thanks, Jarrod


Jarrod ---- The 5% per investment is a "goal" -- this goal is very hard to obtain until you're at about $100,000 total invested. At that point - 20 stocks with about $5,000 gets you there.

Now --- Everyone needs to remember that this investment goal can include more than just stocks -- because what it's really trying to say to people is that you don't want to have too much RISK in any one thing that could possibly do real damage to your investments. If one 5% investment went to ZERO -- it's really not a huge loss -- versus if you had 35% in one thing... so it's really nothing more than a guiding point.

[CornHusker4Life]

Jarrod ---- The 5% per investment is a "goal" -- this goal is very hard to obtain until you're at about $100,000 total invested. At that point - 20 stocks with about $5,000 gets you there.

Now --- Everyone needs to remember that this investment goal can include more than just stocks -- because what it's really trying to say to people is that you don't want to have too much RISK in any one thing that could possibly do real damage to your investments. If one 5% investment went to ZERO -- it's really not a huge loss -- versus if you had 35% in one thing... so it's really nothing more than a guiding point.

That is what I was thinking. I did not want to own 20 stocks with $33,000 in the market just to get to the 5% goal. Time to max out my wife and Is Roths for the year. Thanks Fellas

[GregWeld]

I'm in a bit of a quandary here... I have 11 holdings (12 if you count cash). Each of my 11 are currently valued at around 5% of my total except for 3 which are 2.5-3% of my total. As you can imagine, those 3 are oil related stocks.

So while looking to step in the market a bit more today, and balance the portfolio out...numbers say to pick up more of those 3 stocks. :D

Should I pay more attention to balancing my holdings back out...or add to those stocks that haven't got as beat up as the others? I still like and am holding XOM, ETP and KMI, I'm just not as enamored with them to keep on adding to them as much as I have already done during this slide.

I'm leaning toward adding 1% to the other 8 winners instead.


A very common dilemma!!! Most tend to want to pile into the winners... and loathe putting more money into "bad" investments (the losers). What I want to do is what feels right at the time.... and what my thinking is about how long the losers are going to maybe be losers... and whether or not they're going to be down long enough for me to put money in later rather than be "early" and have 'em sit and be sad sacks.

Right now the market is just a disaster - which is a good opportunity to buy some things at LOWER PRICES than they've been at. Lower prices does NOT mean they're at their lows... they're just lower than where they were or have been.

So -- do what you feel right about... and give some thought to what your time frame is for when you think the losers might begin some recovery. If they're oil related - my sense is you have a year or so maybe less... So there's plenty of time to wait on the side until you have confirmation these are coming back. If they're just market losers because the whole market is down - then those should come back when the market turns back.

You also may want to look at this in another way -- i.e., look at what percentage each name is down -- and then see which name(s) could be invested in to average your yield up and your cost down.... so maybe it's only 2 or 3 names that are down just a few percentage points - and buying more shares of them would raise your yield half or more points.

[GregWeld]

It always seems like you're speaking directly to me. I moved funds to my just opened Roth IRA this week. I've been watching every single one of my stock picks go down each day this week so I've been hesitant to pull the trigger. These are going to be long term holdings and I chose them specifically with that intent so I just need to sack up and jump in.



Without divulging how much you have to invest -- remember that you don't need to buy an entire position all at once... and you don't need to invest 100% of the funds you have all at once. If you have $4,000 ---- try to identify what it is you want to buy - and how many shares total - and then just invest $1,000 and wait - see where we're going - up or down - and put some more to work. Or if you want to own 20 shares of X -- just buy 10 now - and wait and so on.

[slow4dr]

Without divulging how much you have to invest -- remember that you don't need to buy an entire position all at once... and you don't need to invest 100% of the funds you have all at once. If you have $4,000 ---- try to identify what it is you want to buy - and how many shares total - and then just invest $1,000 and wait - see where we're going - up or down - and put some more to work. Or if you want to own 20 shares of X -- just buy 10 now - and wait and so on.


Like you've said before....."Scale in" ........

That actually brings up a question. The law says I have until Tax day 2016 for the 2015 IRA investment year. Do the funds just have to be placed into the account before Tax day to count for 2015? Or do I have to actually invest said funds before Tax day?

[SSLance]

You also may want to look at this in another way -- i.e., look at what percentage each name is down -- and then see which name(s) could be invested in to average your yield up and your cost down.... so maybe it's only 2 or 3 names that are down just a few percentage points - and buying more shares of them would raise your yield half or more points.


Yeah, that's what I started working on today...checking and calculating the yields out. That makes good sense. BTW, the freaking ETP yield is 14% right now... :EmoteClueless: :topic: I also looked at which of my stocks are paying dividends soon...

[SSLance]

Like you've said before....."Scale in" ........

That actually brings up a question. The law says I have until Tax day 2016 for the 2015 IRA investment year. Do the funds just have to be placed into the account before Tax day to count for 2015? Or do I have to actually invest said funds before Tax day?

You just have to have the funds into the account... It can sit there in cash all it wants too...

[GregWeld]

Like you've said before....."Scale in" ........

That actually brings up a question. The law says I have until Tax day 2016 for the 2015 IRA investment year. Do the funds just have to be placed into the account before Tax day to count for 2015? Or do I have to actually invest said funds before Tax day?



Just funded. Nothing says you can't hold cash in an account. So you're good to go.

[Vince@Meanstreets]

Thats why I love to stash in KO.... that stock just sits flat no matter what is going on with the market. And its a divi stock. win win

[GregWeld]

Thats why I love to stash in KO.... that stock just sits flat no matter what is going on with the market. And its a divi stock. win win



All accounts NEED "steady Eddies". People get upset when the market is going up and their steady eddies just kinda plod along. They think they're "losing out" on all the big gains. But man are they happy owning them when the market is crappy and the old steady eddy is holding up their entire account.

That's the thing about investing - and everything we've discussed for the last half a zillion pages....

Don't get greedy
own some steady eddies
own dividend stocks - so you're earning while things are flat or down
own the best of the best - so you feel good about what you own
be patient
buy when things are "on sale"
don't load the boat with too much of any one thing - the 5% rule
scale in
scale out
watch for fundamental changes - they can go either way

[GregWeld]

Boy is this market poopie....

I remember discussing many of the Wall Street darlings - IPO's of late - late being within the last couple years.... since there were so many big ones that came to market.

Just noticed GoPro (GPRO) which many of us use to capture our track events etc.... has just absolutely tanked since hitting it's euphoric high of $65... They just announced layoffs (they coat it in PC speak of realigning with the needs of the company. LOL)... and it's now trading at $14.61

JUST OUCH -- even if you managed to buy on the first day.

I have some "oil and related" that are just as bad. Not picking on GoPro.... just saying - sometimes these IPO's don't pan out with the hype they come on the market with.

[Vegas69]

Biggest down slide I've seen since I started this a bit over 2 years ago. It's only a mud puddle in the road of prosperity and financial freedom.:relax:

[ErikLS2]

Ok, I'll play the optimist, I remember 1999 and 2008, this one is nothing but a buying opportunity compared to those.

I'm getting a large chunk of cash from the sale of a house that'll I'll have to put to work. I always figured that would be easier than taking the losses I did in those past drops but now that I'm here, it really isn't. There is that fear of making the same mistakes again.

[Vince@Meanstreets]

Ok, I'll play the optimist, I remember 1999 and 2008, this one is nothing but a buying opportunity compared to those.

I'm getting a large chunk of cash from the sale of a house that'll I'll have to put to work. I always figured that would be easier than taking the losses I did in those past drops but now that I'm here, it really isn't. There is that fear of making the same mistakes again.

Thats what im saying...I made a killing with AIG and SAH back then. Couple friends did real well, im talking retired at 45 good. its only research.

[GregWeld]

Ok, I'll play the optimist, I remember 1999 and 2008, this one is nothing but a buying opportunity compared to those.

I'm getting a large chunk of cash from the sale of a house that'll I'll have to put to work. I always figured that would be easier than taking the losses I did in those past drops but now that I'm here, it really isn't. There is that fear of making the same mistakes again.



Sorry - this was a confusing post to me. I can't tell if what you're saying is - that in the past you sold low?? And therefore this time around you plan to buy low? Having learned NOT to sell low. Or that you're afraid this time around too?

[GregWeld]

Biggest down slide I've seen since I started this a bit over 2 years ago. It's only a mud puddle in the road of prosperity and financial freedom.:relax:



Thank gawd some folks are LEARNING!!! Buy low -- painful? Yep. Harder to do than when the stocks are flying higher? Yep. Smarter by a margin of 10,000? Yep.

[ErikLS2]

Sorry - this was a confusing post to me. I can't tell if what you're saying is - that in the past you sold low?? And therefore this time around you plan to buy low? Having learned NOT to sell low. Or that you're afraid this time around too?

It's actually kinda interesting. One of the first investments I made was in a mutual fund called PBHG Technology and Communications, probably in the early to mid 90's. I noticed the technology revolution fairly early on and nothing more than a little common sense told that it should continue and grow quite rapidly, which it did.

A $2500 investment in that fund peaked at just over $200k. Somewhere around there I was talking to my father about selling it all because even though I was a complete newb it just didn't make sense to me that it could go up that fast and stay there ("irrational exuberance" maybe? Hmm). Well my dad had a friend who personally knew the manager of another big super successful technology fund, Firsthand Technology Value, and got it straight from him that things were solid and not to worry. Still didn't compute to me but I figured he was a big successful fund manager and what did my totally novice common sense have over all that experience, so I just stayed invested and watched it go back down.

Each time I checked it my thoughts were something like "well hell, it's gone down that far already, can't go down that much more so might as well just ride it out now". This was also the first time, but not the only, that I hesitated in doing something due to the big tax bill it would create (never mind the huge profit I would have realized, that was nowhere near as important apparently).

Well I did eventually get out of it, but not until after most of those gains had vaporized and well after the original PBHG top brass had gotten in trouble or possibly even indicted for wrongdoings and the fund was taken over by another fund company.

In 2008 I wasn't really invested all that much as we had burned through all our cash on fertility treatments trying to have another kid. One thing stands out in my mind at that time though. I distinctly remember Jim Cramer asking viewers if they were ready for Dow 7000 and I remember thinking WHAT???, no way that could happen. Well that was at about Dow 10,000 mid 2008 and we all know where it went from there.

What do I know but this time around, right now, looks more like a normal, healthy correction fueled by what's happened in China as well as an irrational fear of rising interest rates (which are still historically extremely low).

Think 2008 can't happen again? Like I mentioned a few weeks ago, read about "bespoke tranche opportunities". Here is one good one I found that sort of explains it:

http://thinkprogress.org/economy/2015/02/05/3619325/bespoke-tranche-opportunities-are-your-god-now-america/

[glassman]

Is that why its called "paying" attention?

[SSLance]

Holey Crap!

http://thesource.com/2016/01/15/chipotle-will-be-closing-all-of-its-stores-for-a-day/

CHIPOTLE WILL BE CLOSING ALL OF ITS STORES FOR A DAY

ROCKO RATHON JANUARY 15, 2016
Unfortunately for all lovers of Chipotle, they will have to go without the popular franchise on February 8, 2016 as all of the chains will be closed that day. The move comes after quite a few of their locations were forced to shut down permanently when an E.coli outbreak in 2015 and a norovirus outbreak infected 141 people in Boston, MA, which was one of the worst in history.

All of this of course was a public relations nightmare and CEO Steve Ellis took full responsibility in a open letter and ensured customers that this will never happen again. The nation wide close on the 8th of next month will be for a company-wide meeting where food safety will be the main topic of discussion. To make it all up to customers, Chipotle will be doubling up on the amount of free food given upon their return.

[GregWeld]

The market is poopie no doubt.... but here's what I want you to focus on. Your guts. Are you full of fear when you look at your account? Do you see this sell off as the end of your investing and you're telling yourself you should have never ever gotten in the market because it's doing exactly what you feared? Or do you look at this as a set up for buying lower, so you can kill it when the market rebounds?

You need to pay attention to these feelings - because investing is about emotions many times. Emotions can override your brain and make you do things that aren't good for you.

I reminded people many times to "take stock" so to speak when the market was going up every day.... and to remember how that felt - so you could recall that when the market SUCKS. Well.... now it sucks.... and I want you to remember how you feel about it. Because if you're going to be a true investor - there will be MANY highs and lows over many years. Days when you're just crushing it - and days when you wonder what the hell are you doing.

++++++++++++++++++++++++++


Lance mentions Chipotle Mexican Grill (CMG) -- it's been a tremendous stock for quite a while now.... huge gains -- and also some huge dips. I've personally bought and sold it many times. It's not a core holding for me because it's expensive - and it doesn't pay a dividend... BUT ---- if a guy was patient and bought near the 400ish low this last week... he's picked up $75 a share in just the last 4 days of so. If you're a longer term player and you bought this stock back in 2006 or 07 or 08 or 09 or 10 or 11 or 12 or 13..... you have a gain even with the selloff. If you bought recently - you're feeling used and abused.

The company has had some issues - no question about that!! Will it regain it's luster? Who knows? My personal guess is - it will learn from this bad experience and institute some controls so this doesn't happen again. I wish there was one around me because I loved the food and the concept. I'd like one here because it would give me a read on traffic and whether or not the customer abandoned them or are they coming back and creating lines again. Without that read - I can't make an investment. I need that sense of how it's going.

+++++++++++++++++++++++++++++++++


Oil and related:

I continuously hear the talking heads on TV telling me how lower oil prices are good for the consumer. I'm calling this nothing but talking head bullcrap. The damage this is doing to the COUNTRIES that produce - our STATES that produce - The suppliers that feed this industry pipe and pumps and trucks and anything else they use -- they HAVE to be feeling this big time. California is a producer - Alaska - The Dakotas - Texas.... Oil is important to these regions. So I ask myself -- is it important that I'm saving (pocketing) $30 a week when I fill up the Jeep -- or is it more important that Caterpillar (CAT) sells a $400K tractor... I personally feel these low prices are HURTING the economy not helping it. Where it goes is anybodies guess. We'll just have to wait and see where this goes.

[GregWeld]

It's actually kinda interesting. One of the first investments I made was in a mutual fund called PBHG Technology and Communications, probably in the early to mid 90's. I noticed the technology revolution fairly early on and nothing more than a little common sense told that it should continue and grow quite rapidly, which it did.

A $2500 investment in that fund peaked at just over $200k. Somewhere around there I was talking to my father about selling it all because even though I was a complete newb it just didn't make sense to me that it could go up that fast and stay there ("irrational exuberance" maybe? Hmm). Well my dad had a friend who personally knew the manager of another big super successful technology fund, Firsthand Technology Value, and got it straight from him that things were solid and not to worry. Still didn't compute to me but I figured he was a big successful fund manager and what did my totally novice common sense have over all that experience, so I just stayed invested and watched it go back down.

Each time I checked it my thoughts were something like "well hell, it's gone down that far already, can't go down that much more so might as well just ride it out now". This was also the first time, but not the only, that I hesitated in doing something due to the big tax bill it would create (never mind the huge profit I would have realized, that was nowhere near as important apparently).

Well I did eventually get out of it, but not until after most of those gains had vaporized and well after the original PBHG top brass had gotten in trouble or possibly even indicted for wrongdoings and the fund was taken over by another fund company.

In 2008 I wasn't really invested all that much as we had burned through all our cash on fertility treatments trying to have another kid. One thing stands out in my mind at that time though. I distinctly remember Jim Cramer asking viewers if they were ready for Dow 7000 and I remember thinking WHAT???, no way that could happen. Well that was at about Dow 10,000 mid 2008 and we all know where it went from there.

What do I know but this time around, right now, looks more like a normal, healthy correction fueled by what's happened in China as well as an irrational fear of rising interest rates (which are still historically extremely low).

Think 2008 can't happen again? Like I mentioned a few weeks ago, read about "bespoke tranche opportunities". Here is one good one I found that sort of explains it:

http://thinkprogress.org/economy/2015/02/05/3619325/bespoke-tranche-opportunities-are-your-god-now-america/






Couple of things come to mind here:


NEVER be afraid to take a profit (gain).

Nobody ever went broke taking a gain.

When your gain hit big time -- I'd have been scaling it back.... paying the taxes and reinvesting it in other things. THEY ALL might have taken a huge hit in '08 etc --- but the hit would have been to "free money (the gains)".... and as long as you were ahead of the original $2500... that's what counts.

It's okay to go with your gut feeling! What else is there?!?

None of us will ever get it exactly right. For every gut feeling that had us take a gain or loss.... there will be plenty that hit you broadside -- or that keep running after you take some off the top. I've never gotten it perfect. Never will.

[ErikLS2]

Couple of things come to mind here:


NEVER be afraid to take a profit (gain).

Nobody ever went broke taking a gain.

When your gain hit big time -- I'd have been scaling it back.... paying the taxes and reinvesting it in other things. THEY ALL might have taken a huge hit in '08 etc --- but the hit would have been to "free money (the gains)".... and as long as you were ahead of the original $2500... that's what counts.

It's okay to go with your gut feeling! What else is there?!?

None of us will ever get it exactly right. For every gut feeling that had us take a gain or loss.... there will be plenty that hit you broadside -- or that keep running after you take some off the top. I've never gotten it perfect. Never will.

All excellent points, and lessons I learned the hard way.

[Beegs]

+++++++++++++++++++++++++++++++++


Oil and related:

I continuously hear the talking heads on TV telling me how lower oil prices are good for the consumer. I'm calling this nothing but talking head bullcrap. The damage this is doing to the COUNTRIES that produce - our STATES that produce - The suppliers that feed this industry pipe and pumps and trucks and anything else they use -- they HAVE to be feeling this big time. California is a producer - Alaska - The Dakotas - Texas.... Oil is important to these regions. So I ask myself -- is it important that I'm saving (pocketing) $30 a week when I fill up the Jeep -- or is it more important that Caterpillar (CAT) sells a $400K tractor... I personally feel these low prices are HURTING the economy not helping it. Where it goes is anybodies guess. We'll just have to wait and see where this goes.

Big fat yes to this. ^^^ Everyone I talk to is excited at the prospect of very low gas prices.... it's not a good thing I tell them. They don't get it.

Once the drillers, frackers etc... start throwing in the towel, the high yield credit market will be decimated along with pain felt in many other areas of our economy. Hopefully wise decisions are made and we roll through this.

[GregWeld]

Apparently the International Monetary Fund agrees with my "cheap oil" assessment!! LOL


http://www.financialexpress.com/article/economy/imf-oil-price-collapse-is-a-drag-on-global-economy/198333/

[WSSix]

Days like today make me think I need to have money sitting as cash in my brokerage account ready to pounce instead of be delayed 3 days or more waiting on the money to transfer.

Crazy times.

[GregWeld]

Days like today make me think I need to have money sitting as cash in my brokerage account ready to pounce instead of be delayed 3 days or more waiting on the money to transfer.

Crazy times.



There's no hurry Trey. If you're a "trader" - then penny's make a difference.... but if you're buying shares to hold for 2 or 3 years (or way longer) - then try not to get to caught up in the daily swings. You - like all of us - just hates to miss a dollar move, but it's only really a "feel good" thing because in the end it won't affect your performance over the long run.

[SSLance]

Apparently Mr Market enjoyed KMI's earnings call yesterday. :thankyou:

[GregWeld]

Apparently Mr Market enjoyed KMI's earnings call yesterday. :thankyou:

KMI has been a hard one to own for sure! I'm in it 25,000 shares -- and it's down huge (66% one year)... and the 75% cut in the dividend certainly didn't help -- although will help the company long term (which I'm okay with). An almost 20% bounce up today just shows you how fast things can go "the other way" if there's favorable news (thus the reason I won't sell and guarantee myself the loss!). It's a good - well run entity - that is collateral damage in the Saudi oil "war".

CNBC had a lady on today that owned a "hardware store" in the oil patch somewhere in Texas (sorry - didn't pay any attention to the details)... and she said that business was off 90% - and that they can't continue much longer at that rate. This is the kind of thing that I look at (bigger picture) which lead me to post the "low oil might not be so hot" sentiment. It'll take a lot of consumerism to make up for entire business's going out of business!

The cut in dividend on KMI alone - chopped my dividend from $50K a year to $12,500 ---- not a personal "biggie" for me --- but that dividend is paid to lots and lots of people - and it might be a biggie for many. Cuts like that far surpass the little bit their saving on a tank of gas!

[garage_engineer]

I've been lurking for a while on this forum and this is my first post. I've been trying to read as much as I can on this thread but admittedly haven't gotten through it all so I hope I am not repeating a question that has already been answered...

I follow the automotive industry pretty closely and am seeing EV cars and autonomous driving making some big strides lately. So, I have been searching to find the suppliers that will be growing along with this market. For example, every EV needs a battery pack and autonomous cars use a ton of cameras... Am i one the right track here?

I am just a beginner and will continue reading so I can better understand what a "good" company looks like. I am getting a little bit overwhelmed however with trying to find the suppliers for each company and model (Tesla Model 3, Chevy Bolt, etc.) so any tips on how to go about a search like this would be greatly appreciated!

Thanks to everyone who has shared advice so far... I hope I can return the favor someday.

[WSSix]

Welcome MB. Take your time and keep researching the avenues you're interested in. I know nothing about what you're interested in so I can't help other than to say be patient, balance your risks, and don't get emotional.

Agree 100% Greg. I added to a position today and it's only 1% higher than yesterday. It's long term stuff of course so it doesn't matter really. I just hate missing an opportunity to average down my cost basis.

[68Cuda]

CNBC had a lady on today that owned a "hardware store" in the oil patch somewhere in Texas (sorry - didn't pay any attention to the details)... and she said that business was off 90% - and that they can't continue much longer at that rate.


So, before the rapid expansion of fracking and the Eagle Ford field exploration and $100 per barrel oil what was the business model of the "hardware store"? Texas has gone through wild swings since oil was first drilled here. One year they are millionaires driving around in overalls in 1 ton pickups trying to figure out how to spend all the money the next year they are all broke and telling the hard luck stories. Meanwhile the rest of us here just work our regular boring jobs and somehow get by. Fortunately since the big bust of the 80s Texas has diversified and the oil lows do not hammer the whole state. When I was interviewing when I went to college the first time (BSME), I avoided the oil companies for that reason. And again, 8 years later, when I went back again (MSME) I was actively aggressively recruited by a few oil companies and oil tool manufacturers and did not interview with a single one.

What does this have to do with "102". Be careful pursuing the latest hot trend, there is almost always a correction looming on the horizon. Many of my peers that went into that field are now doing something else in a different field.

In my industry (semiconductor) the environment of the past few years has been surprisingly hot and the vendors are struggling to keep pace. But, they have been burned so badly in the past that they are wary about increasing capacity and cost. I know - I used to work at one of the capitol equipment manufacturers and our plant was shut down in 2003. In a way I think it is a good thing that they limit their growth. They are artificially throttling the growth and thus reduce the swings. Now semiconductor has its swings also, but it is a bit more stable and forgiving.

[fearlessmark]

I've been going through this thread, but at 500+ pages, it may take a while...

I do have a question that may have been answered before. I currently have investments in a company 401k and a personal account invested in dividend stocks working toward compound interest. The question is, Is there ever a time when you should just liquidate everything to turn it into cash? The last downturn did a number on my investments, so I'm wondering if there is a threshold on this.

Again, sorry if this has been asked before.

-Mark

[WSSix]

I went through the oil industry from 10-14 mainly in the Granite Wash which is Texas panhandle and western Oklahoma. There are a lot of people hurting right now. Those parts of the country don't have a lot to offer by way of careers. People did whatever they could to make ends meet and take advantage of the boom. A lot of people moved to the area to work. Unemployment in the area was very low. Plenty of money was made by all involved but it's not a life time career in my opinion. Then again, I got out for a reason.

[WSSix]

I've been going through this thread, but at 500+ pages, it may take a while...

I do have a question that may have been answered before. I currently have investments in a company 401k and a personal account invested in dividend stocks working toward compound interest. The question is, Is there ever a time when you should just liquidate everything to turn it into cash? The last downturn did a number on my investments, so I'm wondering if there is a threshold on this.

Again, sorry if this has been asked before.

-Mark

Not if you want to continued to be called fearless :D

Seriously though, I'd have to say it's way too personal of a decision to give a general answer to. What I can tell you is a lot of people like Greg and others that have been doing this a long time said they held on for the ride and made out well in the end because they didn't sell when it got rough. I think it's going to depend on what company you're invested in and just how well their business will survive whatever obstacle its facing. This is why you diversify. To me, this is also why you invest in very solid, read boring, companies that aren't going to make you rich overnight.

[SSLance]

The question is, Is there ever a time when you should just liquidate everything to turn it into cash? The last downturn did a number on my investments, so I'm wondering if there is a threshold on this.



I've been on all sides of this decision, started investing in the late 90s and have seen 3 major market busts during that time. I've been all in, done real well at times...and went to 100% cash back in 2011...completely fed up with the market.

With the help of this thread, I've been tip toeing back into the market since early 2014...only this time in a different way than ever before. I'm still less than 50% invested and still averaging in, but I will say this downturn has felt completely different for me than any other. I'm still sleeping soundly at night and waiting for chances to trickle more back into my core holdings.

Nobody can tell you what to do, you have to pick your comfort level yourself. Being an informed investor and understanding the companies you own helps tremendously with the comfort levels. Good luck...

[glassman]

Well said Lance.

[ErikLS2]

I've been lurking for a while on this forum and this is my first post. I've been trying to read as much as I can on this thread but admittedly haven't gotten through it all so I hope I am not repeating a question that has already been answered...

I follow the automotive industry pretty closely and am seeing EV cars and autonomous driving making some big strides lately. So, I have been searching to find the suppliers that will be growing along with this market. For example, every EV needs a battery pack and autonomous cars use a ton of cameras... Am i one the right track here?

I am just a beginner and will continue reading so I can better understand what a "good" company looks like. I am getting a little bit overwhelmed however with trying to find the suppliers for each company and model (Tesla Model 3, Chevy Bolt, etc.) so any tips on how to go about a search like this would be greatly appreciated!

Thanks to everyone who has shared advice so far... I hope I can return the favor someday.

Welcome! Personally I think this is still very speculative as far as investing goes but they are definitely coming. How well they are received by the driving public remains to be seen I think. It will undoubtedly take some time for people to get used to.

I'm not recommending any of these companies per say but aside from Google, Apple, and any of the automakers working on this (basically all of them) you can research NXPI / FSL (merging), HAR and MBLY for starters and please share what you come up with.

[GregWeld]

I've been lurking for a while on this forum and this is my first post. I've been trying to read as much as I can on this thread but admittedly haven't gotten through it all so I hope I am not repeating a question that has already been answered...

I follow the automotive industry pretty closely and am seeing EV cars and autonomous driving making some big strides lately. So, I have been searching to find the suppliers that will be growing along with this market. For example, every EV needs a battery pack and autonomous cars use a ton of cameras... Am i one the right track here?

I am just a beginner and will continue reading so I can better understand what a "good" company looks like. I am getting a little bit overwhelmed however with trying to find the suppliers for each company and model (Tesla Model 3, Chevy Bolt, etc.) so any tips on how to go about a search like this would be greatly appreciated!

Thanks to everyone who has shared advice so far... I hope I can return the favor someday.



Excellent question --- one I personally have no answer for as far as what companies to look at. I've not looked into that angle of the car industry.

Many people "reverse engineer" Apple products looking for what's inside so they can invest in those suppliers -- basically the exact same thing you're asking about....

I could write a book about the pitfalls of this style of investing... basically gambling - on which "technology" is going to be adopted. When things are in their infancy - new companies can spring up basically overnight, with the latest greatest advance. I'm not saying NOT to invest this way though. Generally it is going to work out better for an investor if they have some kind of inside track (deep knowledge) of who, what, and where these types of technology are headed. Many times these companies are private -- and funded via VC and Angel money.

I'd be very interested in any info you dig up - as this IS a car website/forum - and it's an interesting investing angle as well.

[GregWeld]

I went through the oil industry from 10-14 mainly in the Granite Wash which is Texas panhandle and western Oklahoma. There are a lot of people hurting right now. Those parts of the country don't have a lot to offer by way of careers. People did whatever they could to make ends meet and take advantage of the boom. A lot of people moved to the area to work. Unemployment in the area was very low. Plenty of money was made by all involved but it's not a life time career in my opinion. Then again, I got out for a reason.



Totally agree with this Trey.... it's like investing in the "home builders" -- that entire industry lives in a boom/bust cycle. This is why I've chosen to invest in the transport/storage/supply pipes etc (such as KMI and ETP) -- but that certainly has only been a "proxy" for what's gone on in the oil patch. I didn't expect it to get hit so hard and be so linked (as no matter the price of the oil/gas - you still need to move it somewhere...).

[AMSOILGUY]

Days like today make me think I need to have money sitting as cash in my brokerage account ready to pounce instead of be delayed 3 days or more waiting on the money to transfer.

Crazy times.

I'm not sure who your using but Schwab has treated me great. As long as they see a money transfer from my bank account(3 days) I have been able to put my order in. The trades have been in the hundreds of dollars. They did mention that larger sums have different expectations. So just do the money transfer from your funding source when you want to buy and put your order in. Yes your accounts show weird marks for a couple days but you get your price and they get their money.
You are correct crazy times.

[WSSix]

I have fidelity for that account, Jacob. I might have to ask them about that because it's not huge sums of money I'm talking about. Just a few hundred dollars as well. Thanks

[slow4dr]

So I started making a few purchases last week, just trying to get my feet wet. One particular planned long term holding has me thinking/overthinking. This was a $2K transaction netting 27 shares. This holding was one that had been very stable up to this point but dropped roughly 7% in the few days following my purchase.

Now, I had left additional money in the account for what Trey had already mentioned "being ready to pounce". Now, technically I had planned on using this money for other holdings but I went ahead and dropped an additional $2K on the same company(netting 29 more shares). Today, this holding is up nearly 10% from where I bought the 2nd shares.

Since I am just getting started and with minimal funds I'd prefer to diversify over having this much in one holding. I guess I am just looking for some opinions on what to look out for in this situation. I had never planned on selling anything short term like this but I tend to over think things. This wouldn't be a move to make money on the original shares, it would just be to lower my cost on that holding(technically 2 additional shares rather than cost savings) and free up that money to help diversify.

[GregWeld]

So I started making a few purchases last week, just trying to get my feet wet. One particular planned long term holding has me thinking/overthinking. This was a $2K transaction netting 27 shares. This holding was one that had been very stable up to this point but dropped roughly 7% in the few days following my purchase.

Now, I had left additional money in the account for what Trey had already mentioned "being ready to pounce". Now, technically I had planned on using this money for other holdings but I went ahead and dropped an additional $2K on the same company(netting 29 more shares). Today, this holding is up nearly 10% from where I bought the 2nd shares.

Since I am just getting started and with minimal funds I'd prefer to diversify over having this much in one holding. I guess I am just looking for some opinions on what to look out for in this situation. I had never planned on selling anything short term like this but I tend to over think things. This wouldn't be a move to make money on the original shares, it would just be to lower my cost on that holding(technically 2 additional shares rather than cost savings) and free up that money to help diversify.


I do this all the time -- and when I can - I sell the most expensive shares and hold the lower cost ones. You have to usually check a box when selling (if you're doing so on line) to sell the shares on a FIFO basis --- First in - First Out... OR depending on how they word their selection process -- they might have a box to just sell the highest cost shares first -- or they might say something else. Be sure you know what you're checking!

[WSSix]

So you have $4k in one position that's a solid company that you're wanting to invest in long term and no other positions with other companies, correct? Is this your only retirement account, no company matched 401k or IRA elsewhere?

What I'm getting at is why not just keep it where it is and only add money to other positions? Yes, it's going to be rocky while you build up other positions to help diversify. How long do you think it would take you to get diversified? If we're talking months, I'd say just go with it. If a year or more, I'd say sell you gains and then diversify. If you have other retirement accounts, and this is just the one you want to manage, I'd let it ride.

[68SS2]

I do this all the time -- and when I can - I sell the most expensive shares and hold the lower cost ones. You have to usually check a box when selling (if you're doing so on line) to sell the shares on a FIFO basis --- First in - First Out... OR depending on how they word their selection process -- they might have a box to just sell the highest cost shares first -- or they might say something else. Be sure you know what you're checking!

Please explain what you mean by this Greg. This doesn't make sense to me. Isn't that like saying FIFO of your bank account, as its all just money? Aren't they are just shares no matter what you paid for them?

Doug

[SSLance]

Each share you purchase has it's own cost basis which gains are figured off of when it is sold. When you sell a share, you get to choose which one of your total holdings you sell (choosing your cost basis if different). Your brokerage account keeps track of the cost basis of each share for you as well as a total cost basis.

If you have a widely different cost basis in different shares of the same stock, how you make this choice can have a big effect on the capital gain and taxes owed. (or loss if that is the case).

[slow4dr]

I do this all the time -- and when I can - I sell the most expensive shares and hold the lower cost ones. You have to usually check a box when selling (if you're doing so on line) to sell the shares on a FIFO basis --- First in - First Out... OR depending on how they word their selection process -- they might have a box to just sell the highest cost shares first -- or they might say something else. Be sure you know what you're checking!

It is an online account so that's good to know.


So you have $4k in one position that's a solid company that you're wanting to invest in long term and no other positions with other companies, correct? Is this your only retirement account, no company matched 401k or IRA elsewhere?

What I'm getting at is why not just keep it where it is and only add money to other positions? Yes, it's going to be rocky while you build up other positions to help diversify. How long do you think it would take you to get diversified? If we're talking months, I'd say just go with it. If a year or more, I'd say sell you gains and then diversify. If you have other retirement accounts, and this is just the one you want to manage, I'd let it ride.


I have a total of 6 at this time. The plan is to offload the IS300 and add positions. That car will likely be tough to sell so I may be sitting on it for a while.

I don't have a 401K. I would actually like to discuss that with the owner. They offered a profit share a number of years before I started working there but they got burned by the guy managing the account (not a lot of details are discussed but the guy is in jail now)

[ErikLS2]

I don't have a 401K. I would actually like to discuss that with the owner. They offered a profit share a number of years before I started working there but they got burned by the guy managing the account (not a lot of details are discussed but the guy is in jail now)

Just my opinion but unless a 401k through your job has some matching contributions from the company it does nothing for you other than take your money out of your paycheck for you, if you're not disciplined enough to do it on your own. Most have limited and not very good investment choices and you can do much better investing anywhere you choose through a traditional IRA and/or Roth IRA.

[WSSix]

Erik is correct. Without a company match a 401k or even a Roth 401k aren't anything special. You can do the same thing for yourself with a Roth IRA. I believe you can also set it up so that it automatically debits your banking account. You should definitely have a Roth IRA if you don't already. You can set up a brokerage account under that account and shield all the earnings from taxes. You're just limited to $5500 a year that you can invest. If you want to put away more, get a regular brokerage account after you've maxed out the Roth.

[GregWeld]

Erik is correct. Without a company match a 401k or even a Roth 401k aren't anything special. You can do the same thing for yourself with a Roth IRA. I believe you can also set it up so that it automatically debits your banking account. You should definitely have a Roth IRA if you don't already. You can set up a brokerage account under that account and shield all the earnings from taxes. You're just limited to $5500 a year that you can invest. If you want to put away more, get a regular brokerage account after you've maxed out the Roth.




There are INCOME limitations on who can open a ROTH IRA... I don't know what it is anymore but not everyone can open one.

[glassman]

As of 2016 tax code for Roth IRA

2016
Traditional IRA Contribution Limit if 50 or over $6,500
Roth IRA Income Limits (for single filers) Phase-out starts at $117,000; ineligble at $132,000
Roth IRA Income Limits (for married filers) Phase-out starts at $184,000; ineligble at $194,000

I would verify this with your CPA or tax accountant however....

[ErikLS2]

A great article on what happens to returns if you sit on the sidelines with cash. I was stunned by the reduction in returns if you miss even just the 3 best up days of the year.

http://www.cnbc.com/2016/01/24/went-to-cash-heres-the-next-big-mistake-youll-make.html

[WSSix]

Good call Greg and Mike. I had forgotten about the income limit associated with Roth IRAs.

[GregWeld]

A great article on what happens to returns if you sit on the sidelines with cash. I was stunned by the reduction in returns if you miss even just the 3 best up days of the year.

http://www.cnbc.com/2016/01/24/went-to-cash-heres-the-next-big-mistake-youll-make.html



YES!!! I've called his out several times in the last 500 pages... That if you're out or trying to "time" the market and even miss the one or two big up days --- you might have missed the entire market move for the year. It's why I typically state, that if you're an investor, just put your money in on a regular basis over time - and as time goes by it will take care of you - even if you bought at the very peak. If you're regular - you'll also have bought some shares at lower prices - and in the end, 20 years from now it will look dirt cheap!

[CRCRFT78]

Well I hope someone out there used their GoPro camera to record the nosedive their shares have taken. Back in July of 2014 I bought 10 shares for the hell of it (with money I can afford to lose, not that I wanted to) at $42.90 and just checked to see them at $10.75. :G-Dub:

[JKnight]

It's not only about company match, lets not forget that 401k's allow you to reduce your taxable income and have more substantial annual limits.

Of course we'd all like to know that we're going to make so much money off our investments in retirement that we'll pay the tax now and avoid it later, but I'm not confident enough to make that declaration. For me personally, I'll use the same principles of diversification and apply them to my before-tax and after-tax investments.

[Vegas69]

Go Pro appears to be a one trick pony. I don't know if that's accurate or not, but most of the best performing stocks don't have one customer and are capable of serving the many.They have other products that can smooth out the wrinkles when a competitor takes market share or the market fizzles out. I'm sure there are exceptions, but even Apple has phones, laptops, desktops, ipods, and ipads.

[GregWeld]

I think we've all written about the IPO market (gambling) many times here.... these are stocks that are incredibly volatile... and for every one that hits it big time - there's dozens that are complete flops.

We also discussed GoPro (GPRO) and the fact that they only had basically one thing going - a video camera.... And while as car guys - or people that are active - requiring this style of camera... After you have a couple of them... what's the real market? So this "flop" doesn't come as any surprise to me at all. My only surprise in all of this - is that there's not been a competitor ride in that's taken ALL of the market - with an even smaller easier to use version.

[glassman]

I for one just couldn't see the sustainability in GPRO, yes i use and like the product, but just can't see them selling them to "each" person....They may have some hidden markets i cant' see, but im "trying" to buy quality divi's...

[CRCRFT78]

I wasn't expecting much from GoPro. When the shares doubled in price I wanted to sell but thought the short-term capitol gains taxes would wipe out any profit. I should've just taken the chance anyway.

[GregWeld]

I hope that you all have been able to "take in" and comprehend what has been TWO ---- Fundamental changes ---- in McDonalds (MCD) and Chipotle Mexican Grill (CMG). Wow! Who'd have known we'd get such a clean basic lesson played out almost simultaneously!

McDonalds was sliding to nowhere.... a lack of growth in sales... profits declining. They CHANGE the CEO and change a couple of menu items (adding breakfast all day) and BAM! The stock takes off and sales jump etc.

While that didn't seem like a big deal to newbies.... it is! But beware -- a change like that (CEO) doesn't always work out quite so well. My point is more that you need to be aware of changes and give so extra attention to them. They can be very important.


Chipotle has a food safety problem -- I'd call that a very HUGE fundamental change -- and their stock tanked. That would be a pretty obvious "result". Any time you hear a company having a "safety" issue - your antennas better perk right up because that's not going to work out well for your shares!

Now.... we just saw the results reported for CMG. Not good - in fact - I'd say they were horrible.

Here's the SECOND fundamental change we would want to watch for. Can they get the consumer confidence back? Is this a buying opportunity? Can they turn this very damaging problem around and regain the public trust? They MUST regain the trust of the consumer. Period. They can't open a bunch of new stores and have that be good news on their quarterly reports. They have to get the customer back. The fundamental change?? How they go about doing that..... Or do they fail? I can't think of a worse problem to have to deal with.

[Vegas69]

I can tell you that the Chipotle next to my office has lost 50% of it's business? The line is almost non existent these days.

[GregWeld]

I can tell you that the Chipotle next to my office has lost 50% of it's business? The line is almost non existent these days.



The old saying about a reputation taking years to build and can be destroyed in seconds -- or something along those lines...

Sad really --- because they have really good food IMHO.

[slow4dr]

I have been watching VW (vlkay) very closely since the fiasco last year. It continues to go down and down and down. It seems that every time a meeting is held or an announcement is made from the company it goes down even more. There are some meetings scheduled in February to discuss their future so I am expecting more of the same. This is a company I have confidence will pull through whatever lies ahead so I would consider them a long term buy. However, because I am so new to this I am still uneasy playing this game. I'd rather stick with the tried & true(boring) until my comfort level is higher.


A little off-topic but did everyone catch Greg's pic in the new Goodguys Gazette?

[GregWeld]

I have been watching VW (vlkay) very closely since the fiasco last year. It continues to go down and down and down. It seems that every time a meeting is held or an announcement is made from the company it goes down even more. There are some meetings scheduled in February to discuss their future so I am expecting more of the same. This is a company I have confidence will pull through whatever lies ahead so I would consider them a long term buy. However, because I am so new to this I am still uneasy playing this game. I'd rather stick with the tried & true(boring) until my comfort level is higher.


A little off-topic but did everyone catch Greg's pic in the new Goodguys Gazette?



The old saying about NOT trying to catch a falling knife.... usually holds very true in "stock picking". But at some point - there is some "justification" to be used to step in front of the train and make a purchase. I prefer to wait until they stop falling and start coming back up. I've found I don't need to hit the very bottom -- or try to gamble and get way in front of any bad news yet to be announced.

I do agree that they WILL put this behind them and turn the corner = and it would be a good long term holding. We just need to let the dust settle.

[Vegas69]

Chipotle reminds me of the Target security breach fiasco a year or two ago. Soon, the masses will forget that 100 people got sick out of 5,000,000 meals. I'll utilize the Greg Weld philosophy. Once I see the lines start to get longer again, I'll consider a purchase. It's a good meal for 8 bucks and fast. I like their business model. A simple menu with some health points. Their sites are modern and nice.

By the way, I sold out of Target in my immaturity. I haven't researched it, but I'd bet the farm that was a mistake. :thankyou:

[ErikLS2]

I find it strange that this outbreak at Chipotle only affected them and their restaurants source food locally and they had multiple outbreaks in different parts of the country. I don't know but I can't imagine those food suppliers ONLY supply to Chipotle. One of the strains they found is one not commonly found in food. They've looked everywhere for the source and haven't found it. They've also had norovirus and salmonella incidents and the US attorney's office and the FDA have subpoenaed Chiopotle in a criminal investigation of the norovirus outbreak. There aren't any details released but they typically only investigate these things when they suspect suspicious activity apparently.

I'm a fan of Chipotle and I still eat there regularly but this one totally smells like foul play to me.

Think I'm gonna buy some Google and Facebook tonight.

[GregWeld]

I find it strange that this outbreak at Chipotle only affected them and their restaurants source food locally and they had multiple outbreaks in different parts of the country. I don't know but I can't imagine those food suppliers ONLY supply to Chipotle. One of the strains they found is one not commonly found in food. They've looked everywhere for the source and haven't found it. They've also had norovirus and salmonella incidents and the US attorney's office and the FDA have subpoenaed Chiopotle in a criminal investigation of the norovirus outbreak. There aren't any details released but they typically only investigate these things when they suspect suspicious activity apparently.

I'm a fan of Chipotle and I still eat there regularly but this one totally smells like foul play to me.

Think I'm gonna buy some Google and Facebook tonight.





Good observation Erik --- but here's the take-away. This kind of stuff is why you DON'T try to catch a falling knife. We really don't know if there's more to this story! Perhaps nothing - and perhaps there's something yet to be determined.... thus, too early to be a buyer at this point.

[ErikLS2]

I agree Greg, and as I go there all the time, I will know when the long lines return (if they do) indicating customer confidence is back like Todd said. That will happen before the stock market figures it out I'm sure.

[GregWeld]

I agree Greg, and as I go there all the time, I will know when the long lines return (if they do) indicating customer confidence is back like Todd said. That will happen before the stock market figures it out I'm sure.



EXACTLY!!


A perfect example of investing in "what you know". You'll be able to either see the decline or the consumer coming back. You'll also be a judge yourself... just by noting whether or not you still go - how often - and whether or not the food is better or worse etc.

A little "note" on this while I was in Austin this last weekend. I've been wanting to visit a Shake Shack (SHAK) since they went public. The stock has been a typical IPO over hyped flop.... running way up - and then when the hype has settled down - it's come back down to earth and may still be overpriced on a P/E basis etc (it has no E so can't have a P/E).... The burger was very good - and the place was packed at 2PM and still packed at 5PM.... so that location was humming along very nicely. BUT --- Here's the deal that I was reminded of while my group ate. There is a privately owned joint a block away - called Hopdoddy - the consensus of the group (all 20 somethings) was that Hopdoddy had a far better menu and food. So this "market" has about zero barrier to entry... and that market is rather fickle and can shift (in these small - relative to something like McDonalds etc) quickly. But the winner is often the guy that can grow and manage that growth vs the actual "winner" of the food war. So who knows.

[glassman]

Greg, question.

How do people make money on "shorting a stock"?

I'm of the mindset that if you buy something for $6 and sell it for $7, you made a buck.

Can you explain in laymens terms (read, i have a learning problem) on how these "investors" do it? I'm NOT planning on doing this btw, but curious for educations purposes. We may have talked about this a while back, but i didn't pick it up intectually....thanx dude....


Regarding the restaurant's, I was taught by my brother "always go to the busiest place when in a town you do not know".....makes sense now.

[carbuff]

Mike,

Shorting a stock means you sell it when you don't own it, then buy it back later to 'cover' the position (replace the stock). When you do the initial sale, the money is placed into your account. When you buy it back later, you pay whatever the market price is for the stock at that point.

Short sellers are expecting a stock to move downward. They expect the sale to be at a higher price than the purchase. Since you are paid upfront for the sale, you use those funds to complete the purchase. If the price is lower, you get to keep the difference, and that's the profit. If the price is higher, you pay all that you initially received and more, and that become a loss. You pay your normal commissions on both transactions as well, which factor into your profit.

On the initial sell, you are borrowing the stock to sell from someone else. The brokerage takes care of this behind the scenes. It's not always possible to do this, as it's not always possible for the brokerage to perform the 'borrow'. I don't know the details about how this works behind the scenes...

I've also read that you might have to pay a 'fee' for the borrow, but in practice I have not run into that myself (I generally don't short though, instead using options for any position in that direction).

That answer your question? (definitely not a 101 topic. ;) )

[JKnight]

It's worth noting that with a short, you technically have unlimited downside risk, since there's no limit to how high a stock price can go. Conversely, when you buy a stock, your downside is limited to 100% or a price that drops to $0. Clearly not for the faint of heart.

[GregWeld]

Good response to your question Mike from Bryan.


I NEVER go short - even though I'm absolutely convinced that either the actual stock - or that "industry" is going down. I simply can't get that deeply involved in their financials - or follow something that closely. That takes WORK - and is best left to very savvy investors. The minute you short something -- some company in their industry will announce a take over at a premium price -- and you get KILLED. This is what I mean by - I can't follow something that closely.

I have, however, sold "short against the box" --- meaning --- The shares I intend to "short" are already held in my account.

So -- I might have 1000 shares of something -- I feel -- or have read news -- that I don't like that might cause the shares to go down (I THINK) -- so maybe I sell 500 shares (or even the full 1000) "short". Collect the cash.... NOW - I at least know my cost for the replacement shares when I "cover" the short.

All in all -- this is not a strategy to play unless you're a real gambler. I don't understand why anyone (except a pro) is going to want to bet against a company doing well.... by shorting them hoping they'd do poorly. I prefer just to buy shares in a company I think is going to do well long term and pays me a dividend.

[68Cuda]

Regarding the restaurant's, I was taught by my brother "always go to the busiest place when in a town you do not know".....makes sense now.

We usually look for police cruisers and pick up trucks. Last year we were driving through Carlsbad, NM and it was a little early, like 5:20pm. Places were mostly empty. Wife insisted on Chili's. Not that big a fan of Chili's, but you know what you are going to get at least. I swear someone must have unloaded a bus because it was totally packed and full of people who were obviously from elsewhere. Every time I go into a Chili's that was that busy the service has been painfully slow, especially in small cities for some reason. I have 3 young children who are hungry, not doing that to myself. So I turned around, loaded the kids and drove down the street. Gambled on a local joint that had one pick up truck in front. "Danny's Place, Real Pit BBQ". It was awesome. By the time our food arrived the place was full and people were waiting to be seated. Sometimes gut feel and lucky works out.

[GregWeld]

It's worth noting that with a short, you technically have unlimited downside risk, since there's no limit to how high a stock price can go. Conversely, when you buy a stock, your downside is limited to 100% or a price that drops to $0. Clearly not for the faint of heart.



Totally correct!!! Can you imagine having a short "on" say NetFLix (NFLX) and watching it run after they announced a 7 for 1 split!!

Or shorting Amazon because you're sure Xmas is going to suck....


Shorts usually work best in "hindsight".... after you've watched the stock you knew was going to implode actually does what you thought. Handy - and fun even - as long as you're not actually placing that bet. Reminds me of the 'Bama game --- I was $100 on 'Bama by 7..... yeah had it beat with a winner coming down the last 2 minutes - and BAM! Clemson scores and kills my spread! So while I won the game - I lost the bet!! ($100 plus the 10% vig). So you could be right - and still lose! Yeah the company you shorted sucked - but then somebody else steps in and buys the company because they think they can turn it around.... or the big contract they lost - suddenly gets awarded - or the product (usually drugs) doesn't work for what it was designed for - but works great for something else.... the possibilities are as endless as your losses can be! LOL

[WSSix]

Don't forget about the story of the guy who shorted a stock late in the day. Overnight the stock went gangbusters and he owed well over $100k when the markets opened the next day. He didn't have the $100k.

[fearlessmark]

Shorting stock, or gambling in Vegas. I'll pick Vegas...

[glassman]

Mike,

Shorting a stock means you sell it when you don't own it, then buy it back later to 'cover' the position (replace the stock). When you do the initial sale, the money is placed into your account. When you buy it back later, you pay whatever the market price is for the stock at that point.

Short sellers are expecting a stock to move downward. They expect the sale to be at a higher price than the purchase. Since you are paid upfront for the sale, you use those funds to complete the purchase. If the price is lower, you get to keep the difference, and that's the profit. If the price is higher, you pay all that you initially received and more, and that become a loss. You pay your normal commissions on both transactions as well, which factor into your profit.

On the initial sell, you are borrowing the stock to sell from someone else. The brokerage takes care of this behind the scenes. It's not always possible to do this, as it's not always possible for the brokerage to perform the 'borrow'. I don't know the details about how this works behind the scenes...

I've also read that you might have to pay a 'fee' for the borrow, but in practice I have not run into that myself (I generally don't short though, instead using options for any position in that direction).

That answer your question? (definitely not a 101 topic. ;) )

Thanx Bryan, it makes more sense. I dont have a total grasp on it logistically speaking. I guess it would be like if your a broker for a house, agreed for a price and you sell it for less, make the difference between the two?

[MtotheIKEo]

Thanx Bryan, it makes more sense. I dont have a total grasp on it logistically speaking. I guess it would be like if your a broker for a house, agreed for a price and you sell it for less, make the difference between the two?

You are selling stocks you don't technically own ( stocks on loan) and hoping you can buy them cheaper at a future date to pay back the "loan".

[GregWeld]

Thanx Bryan, it makes more sense. I dont have a total grasp on it logistically speaking. I guess it would be like if your a broker for a house, agreed for a price and you sell it for less, make the difference between the two?

To use your analogy.... it would be like selling a house you borrowed from your neighbor, for $500,000 and hoping the buyer defaults and you could buy the house back for $400,000 and return it to the neighbor you borrowed it from.

If, in the meantime, the real estate market gets 'hot' - and the house value shoots up to $650,000 and the neighbor is demanding the return of his house - and you have no other option but to go to the buyer and lay $100 bills on the table until the buyer decides to sell back to you.

Sometimes - when a "short" is "obvious" to many... that trade gets "crowded" (using terms in quotes that you'll hear on TV etc) and everyone decides to cover... the stock can shoot up just because everyone has to buy the shares to cover their short positions.

Basically - it's a very risky trade.

[GregWeld]

It appears that trying to "game" oil -- by buying the "dips" -- is the best showing of what trying to catch a falling knife looks like. The oil patch is just awash in losses and hemorrhaging. Yesterday Conoco Phillips (COP) cut it's dividend - the first time in 25 YEARS.... which, of course, will cut it's share price. OUCH. This is similar to Kinder Morgan (KMI) which cut it's dividend...

It's just way too early in this MESS to try to figure it all out. Best to just hold if you already have the losses... and WAIT until the oil price gets back to whatever "normal" is. As long as the Saudi's want to continue to kill the market - you don't want to stand in the way of that.

[glassman]

To use your analogy.... it would be like selling a house you borrowed from your neighbor, for $500,000 and hoping the buyer defaults and you could buy the house back for $400,000 and return it to the neighbor you borrowed it from.

If, in the meantime, the real estate market gets 'hot' - and the house value shoots up to $650,000 and the neighbor is demanding the return of his house - and you have no other option but to go to the buyer and lay $100 bills on the table until the buyer decides to sell back to you.

Sometimes - when a "short" is "obvious" to many... that trade gets "crowded" (using terms in quotes that you'll hear on TV etc) and everyone decides to cover... the stock can shoot up just because everyone has to buy the shares to cover their short positions.

Basically - it's a very risky trade.

Thanx Greg. It makes it more clear (for a cloudy brain)... Between Bryan's and yours i've got a basic understanding of something thats not basic. Cheers.

U going to t-hill in Feb or May? Hows the house coming along?

[GregWeld]

Thanx Greg. It makes it more clear (for a cloudy brain)... Between Bryan's and yours i've got a basic understanding of something thats not basic. Cheers.

U going to t-hill in Feb or May? Hows the house coming along?


I'll be there running with NorCal Shelby end of April.

[GEN_X]

Greg, if it wasn't for you saying "the stock will drop after buying" I would be crying right now.

[slow4dr]

Greg, if it wasn't for you saying "the stock will drop after buying" I would be crying right now.


All I keep thinking is "It can't always be like this". Being a NOOB I am just going back and forth between anxiety and complacency. I am certainly getting a crash course in just about every aspect of the market with the volatility so far this year.


I noticed that The existing CFO of ETE had resigned. The CFO of ETP got moved to CFO of ETE and both of their (and related partners) stocks just tanked. I hadn't bought any yet but I had been watching it.

http://247wallst.com/energy-business/2016/02/08/energy-transfer-equity-changes-cfos-stock-plummets/

I know many of you are also AT&T holders. I found this article a little unsettling. I'll be watching this one closely.

http://www.fool.com/investing/general/2016/02/06/alphabet-takes-on-the-cable-industry.aspx?source=eogyholnk0000001&utm_source=yahoo&utm_medium=feed&utm_campaign=article

-J

[GregWeld]

Greg, if it wasn't for you saying "the stock will drop after buying" I would be crying right now.


Absolutely guaranteed!!!!


And worse.... it will go up 5 minutes after you sell.





All I keep thinking is "It can't always be like this". Being a NOOB I am just going back and forth between anxiety and complacency. I am certainly getting a crash course in just about every aspect of the market with the volatility so far this year.


I noticed that The existing CFO of ETE had resigned. The CFO of ETP got moved to CFO of ETE and both of their (and related partners) stocks just tanked. I hadn't bought any yet but I had been watching it.

http://247wallst.com/energy-business/2016/02/08/energy-transfer-equity-changes-cfos-stock-plummets/

I know many of you are also AT&T holders. I found this article a little unsettling. I'll be watching this one closely.

http://www.fool.com/investing/general/2016/02/06/alphabet-takes-on-the-cable-industry.aspx?source=eogyholnk0000001&utm_source=yahoo&utm_medium=feed&utm_campaign=article

-J




This is a market that is looking for ANY reason to hit the sell button. These happen all the time - usually with ferocity... and they can be vicious. I don't care how long you're in the market - you'll never get used to them. The only thing that will ever help you make sense of it all - is when you don't sell (thereby NOT locking in losses) and the stocks rebound, and you're not only made "whole" you get a gain too.

I had a post earlier that stated that I didn't think sinking oil prices were good for everyone = as the talking heads were all saying the consumer was going to really benefit and spend the excess cash etc. I knew that was BS - because I will guarantee you that I spend more every two months than most people make a year - and the price of gasoline is hardly a big deal. What is a big deal is the billions of losses that INVESTORS have seen - and the companies and towns etc that all depend on this industry.

Here's the thing that I've seen many many times over the years - just as you didn't see any of this coming - you won't be ready for the snap back either... because everyone gets so certain that the market rising is just a sucker hole - so you wait and wait and wait for certainty - and by then - the market has run 20%.... LOL

[ErikLS2]

So I went to Chipotle tonight to get a burrito, same one I almost always go to on Monday night, same time, and there's a line and several people inside eating. There hasn't been either of those in there for weeks, and then they gave me my food for free. The CEO had a tele-conference with ALL the employees today, all the stores were closed until around 3 PM. Hmm, coincidence? I doubt it, I"m betting they're going to bring this company back.

[GregWeld]

Just a reminder for all you investors out there..... As the share price falls - the dividend percentage paid rises.

Don't overlook the opportunity to get higher returns when this stuff all goes on sale.

This is a market that is throwing everything to the wolves. But never forget what a market is. For every seller running with their tail between their legs - there's someone on the other side of that trade putting up real cash to buy. Those 'sold' shares are not just sitting on a shelf somewhere waiting for someone to walk by. They only change hands when someone buys.

Stocks like Exxon Mobile (XOM) are now paying 3.69%... and there's many out there paying 10% just due to the share price decline. Stocks like Facebook (FB) are on sale... Apple (AAPL) is off 21%... their sales are tremendous and that price has them paying a 2.2% dividend yield.

I'm not saying you rush in and spend every nickel you have.... I'm saying you should have your radar up and you should be picking away - either averaging down a little here and there - or picking up solid top notch companies at "reasonable" prices. In other words - if you where buying Apple at $130... why would you be afraid to buy some more at $94? I'll tell you why - because like everyone else - you only want to buy HIGH. Get your heads on right and start to look at the market as being opportunistic. Take your best shots when they're dealt. You'd love it if FAST put their EFI unit on sale 30 or 40% off... You wouldn't be afraid to buy then would you. 'Nuff said.

[Vegas69]

I heard a great quote last week. "I make all my money when the market and people are most pessimistic."

[GregWeld]

I heard a great quote last week. "I make all my money when the market and people are most pessimistic."



People "HEAR" buy low, sell high... but they really don't understand it.

[68Cuda]

Stocks like Exxon Mobile (XOM) are now paying 3.69%... and there's many out there paying 10% just due to the share price decline.

For example BP = 7.88%, assuming they do not cut the dividend! That is the risk, eh. Their stock took a beat down after the Gulf oil spill, but they have done good since then.

Read this outlook regarding their dividend.

http://bidnessetcnews.tumblr.com/post/138989413446/bp-is-a-cut-in-dividend-imminent

The question is, how much of this is factored into the current price?

[toy71camaro]

Thanks always for the help and insight from our group here. I ready nearly daily, even if I don't comment.

Watching this market, wondering where I put a little bit of sidelined cash to work. :)

[AMSOILGUY]

Thanks always for the help and insight from our group here. I ready nearly daily, even if I don't comment.

Watching this market, wondering where I put a little bit of sidelined cash to work. :)

Its hard to recommend specific stocks to individuals because everybodies finances and stomach are different. There have been great stocks talked about in the thread and even more not talked about. I picked up some AIZ yesterday based on several things.
They missed what analysists thought they would do and had their biggesst drop in 5 years 12%. It pays a dividend. It has a good chart other then this year which is from what i can tell is across the board. I had a cell phone claim and they were easy to deal with. They have all the major cell phone companies insurance. Fortune 500 company. Plus I've been a customer for years with the hopes of never using it. They have good debt levels and billions in assests and many services which people feel and are told they should have but hope they never use. Then after all that it still could be a bust lol. From what ive taken in following along is pick something you understand and pays a dividend and hang on. Good luck deciding!

[toy71camaro]

Oh yes. We don't really do stock recommendations in this thread. I've been a part of it for a few years now. ;)

I was more generally speaking. sorry for the confusion!

[GregWeld]

It is just too hard to recommend stocks or frankly - any investment. Everyone is so different. And none of us gets it right all the time - or even half the time. I've said before, many times, the worst thing a guy can do is to buy an investment he doesn't really understand. He just buys it because someone else said to. First time it goes to **** - he's a seller and a loser... A guy has to really believe in the company - so that when the market goes like it is now - he has the fortitude to hold or buy more... or UNDERSTAND WHY he's selling. Sometimes we just invest in stuff that was a bad bet.

These markets where EVERYTHING is going south -- these are the markets that if you have the patience - and the guts - you can make money. They're just not as instantly rewarding as buying in an up market and having the shares go green and stay there.

I got a check today - $24+K which is the 6 month "dividend" payment on an apartment investment I'd made 3 or so years ago - when apartments weren't a very hot investment. Today the value of my investment has doubled... and I get a check in the mail. I deposit it, and say "thanks"! LOL Now, I wished I'd have put twice the amount in!

That's a head space that takes "time" in the market to get to.

[GregWeld]

Best statement I've heard on TV (CNBC) EVER....



Dogs chase cars.... and people chase stocks.


In other words - the behavior of only buying stocks when they're rising.

[SSLance]

So... Hope everyone has been enjoying the past few days. :hello: :trophy-1302:

[GregWeld]

So... Hope everyone has been enjoying the past few days. :hello: :trophy-1302:



I have 4 names that have been absolutely hammered..... APU - KMI - ETP - BXMT. Combined these 4 were in the red $1.4M a few days ago. Yesterday they were "only" down $900,000. Think about that "swing" in just 4 short days. HUGE.

They also (regardless of them being in a big deep hole) provide $160,000 in annual income. If I don't sell them - then I don't have a "loss". And in a different environment - they can, and most likely will - continue to recover OVER TIME. And in the meantime - they continue to provide income.

Times like we're in now - are why I continue to invest in DIVIDEND paying stocks.

[GregWeld]

In the recent market environment, Buffett has aggressively been adding to stakes in key sectors of the economy. Energy is one of those. One of Buffett’s more famous proverbs is to “be greedy when others are fearful.” He did just that at the depths of the financial crisis, buying bank stocks. And recently he’s been taking advantage of the beaten down energy sector to load up on premium stocks at distressed valuations. Another great observation from Buffett, that should give everyone perspective when stocks are in periods of decline and people are hand wringing about a variety of risks, he says: “In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”



The key is -- WHICH stock. Warren does his research... he's not just buying anything and everything.

[GregWeld]

Don’t be short on cash when you need it most: "We will never become dependent on the kindness of strangers… We will always arrange our affairs so that any requirements for cash we may conceivably have will be dwarfed by our own liquidity." (2010)




Don’t wager against the U.S. and its economic potential: “Who has ever benefited during the past 238 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder… We will regularly grumble about our government. But, most assuredly, America’s best days lie ahead.” (2015)

[GregWeld]

There's not much more to cover in this thread that hasn't already been discussed add-infinitum.... but just to use a SHORT SALE issue that I just heard them discussing on CNBC

SEADRILL (SDRL)


The shorts were HEAVY in this name ---- and just when they thought they'd killed it - the Billionaire that controls a lot of the company - announced that he'd raised half a billion in cash by selling his other assets in order to prepare for a big deal involving SDRL.... BAM!! Up 109% in the last FIVE DAYS... UP 60% just today!


That my friends - is how you get KILLED.

[WSSix]

Yep! I won't ever short anything, lol.

It's been fun watching oil stocks bounce all over. I've got two names that have jumped 50 and 70% recently. Wish I could say I'm rolling in the dough. All they did was go from $1 to $1.70 :D Still, a gains a gain.

[87SS]

Short Squeeze!....................not Fun!

[GregWeld]

Yep! I won't ever short anything, lol.

It's been fun watching oil stocks bounce all over. I've got two names that have jumped 50 and 70% recently. Wish I could say I'm rolling in the dough. All they did was go from $1 to $1.70 :D Still, a gains a gain.



It's a HUGE gain -- and just think if you had 50 or 100 grand in them!! Then it really isn't small potatoes at all!!!


And yes -- Investing - in anything - should be all about the PERCENTAGE of gain. 5% is 5% and 70% is -- 70% !! Regardless if it's measured in pennies or 1,000 dollar bills.

[ErikLS2]

There's not much more to cover in this thread that hasn't already been discussed add-infinitum.... but just to use a SHORT SALE issue that I just heard them discussing on CNBC

SEADRILL (SDRL)


The shorts were HEAVY in this name ---- and just when they thought they'd killed it - the Billionaire that controls a lot of the company - announced that he'd raised half a billion in cash by selling his other assets in order to prepare for a big deal involving SDRL.... BAM!! Up 109% in the last FIVE DAYS... UP 60% just today!


That my friends - is how you get KILLED.

Luckily SDRL doesn't pay a hefty dividend. If it did and those shorts held shares on the ex-date then they would also have to pay those dividends to whoever they sold the shares to.

[GregWeld]

I sure hope many of you were buying some shares of your favorite picks a few weeks ago. Even better is if you have your dividends automatically reinvested. Then it takes your fear and loathing (of buying stocks when they're down) out of the equation.

Once again - if you've been paying ANY attention to "the market" - these last few weeks have been a great test of your resolve. I hope you've all made personal "note" of how you felt about seeing your gains erased - and the green turn to red. Buying when everything is all green is so easy. Buying when it's red or putting more money to work in things you show a loss in... that's hard. It's also the way you'll make the most money. STAYING in the game is how you win.

[GregWeld]

Seems to me that there's a decided lack of interest in "investing 102" since the market turned a bit south for a few months... I seem to be the only one posting - and then not getting much - if any - responses.

Funny though - that the lessons discussed over the time this thread started, have played out. The teachings pro-offered here - "buy when the market is down" - Buy best of the best - don't gamble - buy dividend payers.... should have helped everyone weather the downturn - and hopefully helped you all STAY in the market when the sun turned to darkness.

Just look at AT&T (T) and Verizon (VZ) -- up HUGE and here they are thought of as boring blue haired old lady stocks. Ditto Philip Morris (PM) and Altria (MO)... I'm not going to bother to post all the stats. If you're interested enough, it's easy enough to look at them. Again - I'm not recommending these - I'm just using them a prime examples of why being in certain types of stocks pays off big time vs being in the high beta names that everyone THINKS are the places to be.

[SSLance]

I've just been sitting back and smiling Greg...nothing really to talk about. :)

BTW, my account balances hit an all time high Monday and I haven't added funds to them in many years. And I'm still only about 50% invested. I know I know, I should have bought some more while they were on sale...but I'm sleeping well at night and did all the way through this last dip.

[MX145]

I hope you guys continue to post as this forum has been a great place to learn.

[Vegas69]

I'm still buying every single month with no concern about market changes.:)

[im4u2nvss]

Thanks again for all the efforts that have been, and I am sure will continue to be put into this awesome thread. Some of the info is on repeat, but that really helps etch the principles into a persons mind(like the common mistake of naturally wanting to sell low instead of buying more shares at a discount). I have referred this thread to at least six coworkers and family/friends, and the few that really listened to it, are being reworded(and thankful).:thumbsup:

[CRCRFT78]

I haven't had any available funds to purchase any new shares but everything is moving in the right direction after being in the red for some time. ATT (T) has finally hit its stride after sitting idle to +16%, KMI is now only -40% after being as low as -55% and everything else is slowly chugging along. On another note, I watched The Big Short the other night. Does that count as doing some investing research lol.

[ironworks]

Seems to me that there's a decided lack of interest in "investing 102" since the market turned a bit south for a few months... I seem to be the only one posting - and then not getting much - if any - responses.

Funny though - that the lessons discussed over the time this thread started, have played out. The teachings pro-offered here - "buy when the market is down" - Buy best of the best - don't gamble - buy dividend payers.... should have helped everyone weather the downturn - and hopefully helped you all STAY in the market when the sun turned to darkness.

Just look at AT&T (T) and Verizon (VZ) -- up HUGE and here they are thought of as boring blue haired old lady stocks. Ditto Philip Morris (PM) and Altria (MO)... I'm not going to bother to post all the stats. If you're interested enough, it's easy enough to look at them. Again - I'm not recommending these - I'm just using them a prime examples of why being in certain types of stocks pays off big time vs being in the high beta names that everyone THINKS are the places to be.

What is just my luck is 2or 3 months ago I had to sell this portion my mom had left for my sister and I ten years ago. I wanted to sell the stock and move it over to one account that was not thru the mail and not completely separate of my schwab account. Well that of course took like 45 or more days to get handled. And of course it gains nearly 20% while I had to go thru all the channels. HAHA figures.

But my Racecar money has done well. Thanks Greg.

[LuxurySportCoupe]

I'm roughly 400 pages through this thread, lol. It has inspired me to take control and have a better understanding of my own finances. I had started a Roth IRA a few years back, but the broker I was with only offered mutual funds, so the performance was lackluster to say the least. The paperwork is being processed right now to transfer that Roth over to Schwab, so I can at least control what I'm invested in.

Also, I was browsing google finance and found this article. http://www.seattletimes.com/business/boeing-aerospace/boeing-job-cuts-this-year-could-reach-10-percent/
Not trying to say buy or don't buy, but it's a good example to think about, is their stock going on sale, or is this a fundamental change?

[mdprovee]

Greg,

I want to thank you for your effort in this thread. Because of you, and your advice, this month we will have paid off all of our credit cards, approx. $15,000 in about 2 years, and started saving more money per month. On top of our retirement account getting better. It has been tuff at times, and no car parts until we can pay cash for them, but we are on our way. Thank you again.

[WSSix]

Just like Lance and Todd, I'm sitting back and watching things progress. I'm in pretty much all the stocks I care to be in at this point I think. For me, it's just a matter of continuing to add to current positions and keeping an eye on them to an extent. I only have a few gambles that I watch more earnestly than others.

I'm certainly glad other people have benefited from this as much as I have. Thank you all that have been a part of that.

[GregWeld]

I'm so happy for each of you! Investing IS NOT easy.... it takes a lot of patience, and research, and soul searching. If I've helped one person change their view of their world - then we've all won! I'm glad so many of you are still participating! I thought maybe everyone had given up at the first "dip"! Thank god you have not!!





I've just been sitting back and smiling Greg...nothing really to talk about. :)

BTW, my account balances hit an all time high Monday and I haven't added funds to them in many years. And I'm still only about 50% invested. I know I know, I should have bought some more while they were on sale...but I'm sleeping well at night and did all the way through this last dip.

I hope you guys continue to post as this forum has been a great place to learn.

I'm still buying every single month with no concern about market changes.:)

Thanks again for all the efforts that have been, and I am sure will continue to be put into this awesome thread. Some of the info is on repeat, but that really helps etch the principles into a persons mind(like the common mistake of naturally wanting to sell low instead of buying more shares at a discount). I have referred this thread to at least six coworkers and family/friends, and the few that really listened to it, are being reworded(and thankful).:thumbsup:

I haven't had any available funds to purchase any new shares but everything is moving in the right direction after being in the red for some time. ATT (T) has finally hit its stride after sitting idle to +16%, KMI is now only -40% after being as low as -55% and everything else is slowly chugging along. On another note, I watched The Big Short the other night. Does that count as doing some investing research lol.

What is just my luck is 2or 3 months ago I had to sell this portion my mom had left for my sister and I ten years ago. I wanted to sell the stock and move it over to one account that was not thru the mail and not completely separate of my schwab account. Well that of course took like 45 or more days to get handled. And of course it gains nearly 20% while I had to go thru all the channels. HAHA figures.

But my Racecar money has done well. Thanks Greg.

I'm roughly 400 pages through this thread, lol. It has inspired me to take control and have a better understanding of my own finances. I had started a Roth IRA a few years back, but the broker I was with only offered mutual funds, so the performance was lackluster to say the least. The paperwork is being processed right now to transfer that Roth over to Schwab, so I can at least control what I'm invested in.

Also, I was browsing google finance and found this article. http://www.seattletimes.com/business/boeing-aerospace/boeing-job-cuts-this-year-could-reach-10-percent/
Not trying to say buy or don't buy, but it's a good example to think about, is their stock going on sale, or is this a fundamental change?

Greg,

I want to thank you for your effort in this thread. Because of you, and your advice, this month we will have paid off all of our credit cards, approx. $15,000 in about 2 years, and started saving more money per month. On top of our retirement account getting better. It has been tuff at times, and no car parts until we can pay cash for them, but we are on our way. Thank you again.

Just like Lance and Todd, I'm sitting back and watching things progress. I'm in pretty much all the stocks I care to be in at this point I think. For me, it's just a matter of continuing to add to current positions and keeping an eye on them to an extent. I only have a few gambles that I watch more earnestly than others.

I'm certainly glad other people have benefited from this as much as I have. Thank you all that have been a part of that.

[glassman]

Cheers everybody, just chilling, working, having fun, and putting some away....

I'm always reading anything anybody posts on this thead. I'm sorry i'm not more experienced to help out more...this thread is the cat's meow though...i've learned alot.....

Nice to see most of my positions in green lately (Charles Schwab), but didn't sell anything while the chips were down a few months back....

[Evil_s10]

I am in the same boat as most the others, sitting on the stocks I currently have and building up a little nest egg to add onto them when the time is right.

About a year back I had invested in a little known stock out of some word of mouth around the water cooler. I did not invest a significant amount into it as this was just a gamble. Well this gamble failed and the stocks sank.

Ever since then, I have been putting more into my main portfolio. Number one focus is to have a more diversified portfolio as well as equal distribution between each of these stocks.


So far to date (about a year and a half) my Schwab account shows 8.13% in the green.

[Vegas69]

Regardless if it's business or investing, I believe systems must be in place to stay consistent and win. All my retirement stuff at Northwestern Mutual is on auto pay. I also have a set amount transferred to Scottrade every month so I'm reminded to buy stocks. I like the philosophy of giving and investing, then spending what's left.

[GregWeld]

I read with interest a couple days ago that BOEING (BA) was going to lay off 8,000 workers.... I thought (immediately) OH OH! I don't own the stock - it's generally (in my mind) a boom or bust industry - although less so now that there's really only the two players.

So just because I was reminded of it by another article - I looked up Boeing. Just as I had thought might be the case - the stock is down Year to Date - and for the "year" (last 12 months). So - as I usually do -- I stretched that chart out to 5 years -- WOW! Up 70+ %.... so down 8% this year now doesn't look so bad.... so out to 10 years I went -- WOW! Up 60+ %...... and it pays a real decent dividend....so out I went to "ALL" -- it's ONLY up 7000+%


LOL


Just using this as another example of what you "think" and what you "KNOW". Usually a big difference. No I'm not buying BA or even recommending it - what I am saying is that a little actual research goes a long way....

[toy71camaro]

I'm still around too! LOL.

I check the thread every day or two for new posts, but don't have much to offer in added value on top of what we got. Unless some new players come in and start asking questions.

Overall, I'm very happy with what I've learned and put in place from here. It's done well, and I'm continuing to grow that nest egg!

I did drop in a few new names in the bucket in Feb. We'll see how they play out. Was in some industries I wasn't in yet. :)

[GregWeld]

Interesting discussion on Tesla (TSLA) this morning on CNBC. They just had LINES to put down money on their newest offering! That was when I first bought Apple (AAPL) way back when (long since sold) because the stores had lines out the door! Always a good sign right? I mean - WTF - People standing in line to buy your stuff should spell big $$$ and profits.

However.... As the talking heads pointed out. There is a big difference between loving a product, or business.... and loving THE STOCK. This particular stock is priced at a point that values every car they build at 1 million dollars! Holy WOW!

However... there are MORE BUYERS than sellers for the shares! As this morning they're up quite nicely simply based on the lines out the door. They LOOSE money on every car they build (now). So what people are buying is the future. The future is unknown, but apparently people feel that eventually the stock will be worth more than they paid. Will that play out well? Who knows. It has to fall in the gambling category in my humble opinion. So did FaceBook - Amazon - Microsoft (back in the day) and even Apple was a big gamble when they first roared back to life from the dead.

It's so interesting. What to do? Play a little? Or just watch? Danged if I know! Some times investing is just emotional - we don't want to be the only guy that didn't make money on something.... damn the torpedos! I always find that owning something like this is so gut wrenching - because its moves are usually violent. One days news has it soaring - the next day it drops like a rock. It's 52 week range? $141 to $286 !! That is a serious rollercoaster! Can you stomach $50 drops? It's such an interesting problem isn't it? Personally? I think it's the future. What worries me as an investor is, is there some other larger company that comes out with a Tesla beater... or do they just stand by and let them build the market? Think about Amazon and Microsoft in their infancy. Amazon was virtually unimpeded in building out it retail store crusher! Now all the big box stores are so far behind they can't possibly catch up. We all buy stuff on Amazon! IBM gave up on personal computers and handed that whole technology to Microsoft... and the rest is history. So is this what Tesla is doing?

[GregWeld]

I found this article after that last post.... Interesting information in it.


http://abcnews.go.com/Business/wireStory/affordable-model-teslas-biggest-test-38080836

[ErikLS2]

Article I found interesting on stock brokers, financial advisors, etc.

https://www.linkedin.com/pulse/financial-services-industry-needs-stop-bullying-its-heres-robbins

[GregWeld]

Article I found interesting on stock brokers, financial advisors, etc.

https://www.linkedin.com/pulse/financial-services-industry-needs-stop-bullying-its-heres-robbins


Great article.... and I have discussed this many times in the past. That people THINK their mutual fund has no fees or that some broker has their best interest in mind. Poppycock!

There's nobody that is inhaling and exhaling - that can't do quite well doing all of this on their own. The key is nothing more than a basic understanding.

[Vegas69]

Bottom line, people are looking for the path of least resistance, the easy way out. This is one of the worst times to put your head in the sand. Do you research, take responsibility, work on your debt aggressively, which will allow you to allocate more for investment.

I think debt is an under utilized topic in this thread. The more money you piss down the hole, the less you have to create your future. 70% of Americans live paycheck to paycheck.

My goal is to be debt free by Fall. Owe NOTHING on the house, land, cars, boat, credit cards, student loans, NOTHING. It's looking promising.

This creates freedom to spend time with your family and pursuing new interests, it also creates the opportunity to INVEST LIKE CRAZY. That will turn into wealth that will engender a legacy for you family and allow you to GIVE to those in need.

[GregWeld]

Bottom line, people are looking for the path of least resistance, the easy way out. This is one of the worst times to put your head in the sand. Do you research, take responsibility, work on your debt aggressively, which will allow you to allocate more for investment.

I think debt is an under utilized topic in this thread. The more money you piss down the hole, the less you have to create your future. 70% of Americans live paycheck to paycheck.

My goal is to be debt free by Fall. Owe NOTHING on the house, land, cars, boat, credit cards, student loans, NOTHING. It's looking promising.

This creates freedom to spend time with your family and pursuing new interests, it also creates the opportunity to INVEST LIKE CRAZY. That will turn into wealth that will engender a legacy for you family and allow you to GIVE to those in need.





Americans need to learn a very important adage:


"You can not spend your way to wealth"

[DBasher]

There's nobody that is inhaling and exhaling - that can't do quite well doing all of this on their own. The key is nothing more than a basic understanding.

I tried explaining this at my last shop steward meeting when a couple knuckleheads wanted to put ANOTHER .20 in one of our pensions. I was told that most members weren't as savvy with their money as me :confused59: and that I needed to think of the group as a whole.....that's more than Poppycock! The meeting ended with me suggesting that people were either ignorant or lazy if they didn't at least look into what their money is NOT doing for them.

The bad, .20 went to the pension:lostmarbles:
The good, discussions have started about a financial course for 2nd year apprentices explaining the three pensions and other ways of investing. :thumbsup:

I don't say much in this thread but I'm reading and rereading it constantly....thank you.

[glassman]

I'm trying to get my employees (coworkers really) to do a Roth IRA, their companies pension, SSI, and individual savings. Cant spend more than what you make, related to that, my dad always said "its not what you make, (at work), its what you keep". I partially agree with that,but its hard to keep anything when the cost of living (bare essentials) is more than you make . Either move or get a better job or better education or work more!!!

Bottom line, dont work too much, dont work too little, but PAY ATTENTION (my #1 problem lol)

[MPM IV]

I've only made a few post in this thread due to a lack of knowledge, but I check in every few days to read anything new that's been posted.

I started investing last May before understanding the 5% rule, or about scaling in and out of positions. I opened a large (for me) position in RDS.B and a smaller position in KMI among others. Just about a month ago I was in the green for the first time thanks to the other positions. In Jan. I opened a small position in Ford, and then added to it in Feb. Other than watching and collecting dividends that's the only change to my portfolio recently.

I have shared this thread with one friend that has opened an account and started investing, and tried but failed to motivate a few others.

I sincerely appreciate the efforts of Greg and everyone else that's contributing.

[GregWeld]

I've only made a few post in this thread due to a lack of knowledge, but I check in every few days to read anything new that's been posted.

I started investing last May before understanding the 5% rule, or about scaling in and out of positions. I opened a large (for me) position in RDS.B and a smaller position in KMI among others. Just about a month ago I was in the green for the first time thanks to the other positions. In Jan. I opened a small position in Ford, and then added to it in Feb. Other than watching and collecting dividends that's the only change to my portfolio recently.

I have shared this thread with one friend that has opened an account and started investing, and tried but failed to motivate a few others.

I sincerely appreciate the efforts of Greg and everyone else that's contributing.



The 5% "rule" has been discussed a zillion times in this thread - and like most "rules" has some flexibility to it. Pretty hard to get started with 2 or 3 positions and make the rule work. It's really more a rule when you get 20 or more thousand.


Glad you enjoy the learning and doing!

[GregWeld]

I'm writing this in the vane of "WHAT TO THINK ABOUT" --- not a discussion on whether or not to buy or sell a particular name etc.



I'm sure you guys are all following Tesla (TSLA) - even if you don't own it - and it's relevant here because we're a car forum.

I see this morning that people have plunked down $1,000 per to simply "reserve" a car... a car that's not even in production yet -- and there were near 300,000 "reservations"! ELEVEN BILLION in future sales if all those folks take the cars. That's a big number.... and in anyones eyes - would be considered a huge success. We'll see if they can produce - and produce at a PROFIT. After all - making money is what drives any business.

So to me... what is this saying to the other manufacturers? Shouldn't they be waking up this morning and asking themselves where they are in this market? 300,000 people plunking cash down and waiting a year and a half for something they're not even sure will be produced! If I was an auto manufacturer - I'd be having a board meeting this morning and I'd be pounding the table for getting on this bandwagon! That's what worries me on TSLA.... while they're the known leader. What happens to the stock IF - big IF - someone else comes up with a winning design - or that goes further on a charge etc. That's the gamble. In the meantime - Tesla is killin' it. Are they the Apple of the auto industry?

[96z28ss]

I'm writing this in the vane of "WHAT TO THINK ABOUT" --- not a discussion on whether or not to buy or sell a particular name etc.



I'm sure you guys are all following Tesla (TSLA) - even if you don't own it - and it's relevant here because we're a car forum.

I see this morning that people have plunked down $1,000 per to simply "reserve" a car... a car that's not even in production yet -- and there were near 300,000 "reservations"! ELEVEN BILLION in future sales if all those folks take the cars. That's a big number.... and in anyones eyes - would be considered a huge success. We'll see if they can produce - and produce at a PROFIT. After all - making money is what drives any business.

So to me... what is this saying to the other manufacturers? Shouldn't they be waking up this morning and asking themselves where they are in this market? 300,000 people plunking cash down and waiting a year and a half for something they're not even sure will be produced! If I was an auto manufacturer - I'd be having a board meeting this morning and I'd be pounding the table for getting on this bandwagon! That's what worries me on TSLA.... while they're the known leader. What happens to the stock IF - big IF - someone else comes up with a winning design - or that goes further on a charge etc. That's the gamble. In the meantime - Tesla is killin' it. Are they the Apple of the auto industry?

It will never happen with the Big 5 automakers. It works for Tesla just like it did for Apple. They were the underdog and they came out with something out of the box, and tons on innovation, that the Big Guys won't do cause they are to blinded by their size.

[68Cuda]

In the meantime - Tesla is killin' it. Are they the Apple of the auto industry?

Tesla is the only electric vehicle manufacturer of scale to actually make an electric car we would want to drive. The big automakers must be convinced that the buyers of electric cars want something ugly. How else can you possibly explain the Leaf?

[DBasher]

Not to stray too far off topic but...I watched the Preston Tucker movie the other night and I've got to wonder if the big 3 or 5 aren't trying to backdoor Tesla. I know early on lawsuits were filed against Tesla because of the way they were selling their cars, without dealerships. Do the giant manufactures strangle Tesla with lawsuits or do they buy them out?

Tesla are everywhere here in the NW.....everywhere! I've done work in one of their buildings in downtown Seattle and it's definatly a complete buying experience. Small, full access to the cars, display model chassis's with the drive components...a different way of doing things for sure.

[GregWeld]

Tesla is the only electric vehicle manufacturer of scale to actually make an electric car we would want to drive. The big automakers must be convinced that the buyers of electric cars want something ugly. How else can you possibly explain the Leaf?

Not to stray too far off topic but...I watched the Preston Tucker movie the other night and I've got to wonder if the big 3 or 5 aren't trying to backdoor Tesla. I know early on lawsuits were filed against Tesla because of the way they were selling their cars, without dealerships. Do the giant manufactures strangle Tesla with lawsuits or do they buy them out?

Tesla are everywhere here in the NW.....everywhere! I've done work in one of their buildings in downtown Seattle and it's definatly a complete buying experience. Small, full access to the cars, display model chassis's with the drive components...a different way of doing things for sure.




I agree with both these thoughts. ALL of the other hybrids and electrics are just flat ass ugly or boring to the max. The big 3 or 5 think the market is just the ultra tree hugger crowd.... and not at all about the "driver experience" - whereas TESLA continues to make cars that DRIVERS actually want to be seen in and experience.

Having said all of that - and being in complete agreement..... You MUST ask yourself how long a company can continue losing huge money every quarter - while still trying to build new models etc. Of course - a large part of their losses are because they are "investing" in new plant and equipment etc. So perhaps like AMAZON (AMZN) losing money - it's not really losses as much as it is supporting growth and expansion. I'm not that smart - and don't care to pour thru their financial statements to figure it all out!


Again - not discussing this with a you should or shouldn't own "X" -- but more - it's an interesting CASE STUDY.... of investing in "growth" or gambling on the future in hopes (because that's all you've got to hang your hat on) they grow in to the stock price.

[68Cuda]

Having said all of that - and being in complete agreement..... You MUST ask yourself how long a company can continue losing huge money every quarter - while still trying to build new models etc. Of course - a large part of their losses are because they are "investing" in new plant and equipment etc. So perhaps like AMAZON (AMZN) losing money - it's not really losses as much as it is supporting growth and expansion. I'm not that smart - and don't care to pour thru their financial statements to figure it all out!

They have a decent gross profit per model, just not producing the volume they need to outrun the spending on development and growth. They are selling their powerwall home battery systems faster than they can produce them, and they have 276,000+ pre orders for the car they are releasing next year. Now 2016 Q1 they delivered 14,820 cars. They fell short of their Q1 estimate because of parts shortages. The logistics of expanding from 5,000 cars per month to 50,000 cars per month is staggering. The $276,000,000 their customers fronted them will not do it. They need real cash and logistics experts. Someone like a big 3, or maybe a company like Boeing that is accustomed to large scale short timeline projects. The way Tesla has run the company from the beginning I have always had the impression they were fishing for a buyer.

[glassman]

I'm sorry, I dont "tweet". I had heard a fewdays back that Mr. Musk had tweeted "hmmm, might have to rethink production"....wtf, 300k deposits ?????

Great product imo, but can they deliver? that is the 25000 question....

Now, if somebody could come out with a light duty pick up hybrid...not sure if it would sell, but i'd be in....

not sure if i'm in to buy the stock or not, just not sure.....

[GregWeld]

Since we're all tool and car guys - I think some of you own Snap-On (SNA). It's been a little poopie for the last several months. Year to date it's down 8.58%... and it's not a huge dividend payer to begin with...

So while I was just poking around - as usual I stretched the chart out just for a look see.

Only reason I'm writing this post....


Think about where you were in 1986..... and think if you'd just have put $1,000 in to Snap-On stock..... that was 30 years ago. What would you have today had you never put another dime into this??



You'd have a 916% GAIN..... Yep.... your math is right... you'd have damn near a million bucks to retire on.

[SSLance]

I was a working kid in college in 1986, a thousand dollars to me back then would have felt like a million dollars!!

Great example though Greg.

[GregWeld]

I was a working kid in college in 1986, a thousand dollars to me back then would have felt like a million dollars!!

Great example though Greg.



LOL -- RIGHT!!!


I just thought it was a great example of kind of a "ho hum" stock pick.. Which - when "charted" - was kind of an eye opener. The whole post was more about - HEY!! Think how simple something like this is - and look at the result. What made the result was, TIME.

In 1986 Microsoft had just gone public. Gwen was one of three or four people in Human Resources there. She got 750 shares of stock as an "option". At the time - the shares traded at around the $30 level - and the option price was $32.50 ---- what would those 750 shares be worth today? The "cost" of the option is $24,375.00 ---- and the growth since inception is 54,582 PERCENT.

I just did "head math" - taking the 750 shares - and doing all the SPLITS - quickly - the 750 shares grew into 288,000 shares - at todays price - your 24 grand would be worth over 15 MILLION. Just barely enough to retire on. LOL

[CRCRFT78]

Today I decided to check my list of stocks that I follow on Google Finance because I am interested in adding a position to one of my ("Gambling") accounts. I call it that because this is an account I use for money I would otherwise blow on BS like eating out, car parts, money I would otherwise spend without any expected return etc etc. Not that I want to lose money investing but if I were to make a bad pick (like my GoPro shares I'm hanging on to), going to zero won't hurt my retirement account and anything positive is a plus.

Back to my point. Nothing on my list really stands out to me as something I should look into for a possible purchase. They are all what I consider good or decent stocks but for whatever reason nothing has caught my eye. Without making a stock recommendation, what do some of you do to get the juices flowing again after some idle down time? Do you just watch the market to see whats moving? Listen to the talking heads to hear what they are saying?

[WSSix]

My gamble stocks are so minor I don't even think they qualify as gambles. With that said, Zoes Kitchen(ZOES), Valspar(VAL), Mid Con Energy(MCEP), and California Resources(CRC) are what I consider my gamble stocks.

CRC was "given" to me because I owned OXY who split them off. I know very little about the stock. I consider it a gamble because it's oil related and the only reason I added to my position was because it was about $1.40 per share. I said what's another $100. Seriously, that was it, lol. It's oil related so maybe it will climb in a few years.

MCEP when I bought into it was doing well, inexpensive, and paid a great dividend ~10%. So I said sure why not. I was actually doing work for them while at Halliburton so I knew their business model and thought it was a decent way to turn a small profit for them. Then the oil market crashed. So, this time around, I can only add once a year since it's in my Roth, it was a little over $1 per share and I said, what's another $100? again. I see a pattern developing. I've lost 90% on this pick already. It may recover or not. I figured maybe this $100 will hep minimize my losses. It certainly won't hurt any more.

VAL. I simply was looking to diversify when I pulled them up. Both them and PPG have very strong charts, pay a dividend, and have broad coverage in different markets. I looked to them to be a steady performer. I also just wanted to sit back and let it go. Maybe I'd add to it or not. I didn't see the Sherwin Williams buy out coming at all. That caused it to jump big time. Since it was a gamble and hadn't really done anything to show me it was going to grow, I only made my small initial purchase. Kind of wish I knew the Sherwin buyout was coming ahead of time.

ZOES. Good food and people seem to pack the place out at lunch time. Thought I might be able to get in early on a future winner. I think the fast casual segment is going to continue to grow and be attractive to consumers. I spent $42 on a "fancy" meal last weekend that was only part of a NY strip steak and I left hungry. %^&$ that bs! It wasn't $40 tasty. I'm not the only person who's starting to seriously question these food places that don't offer food that matches the sticker price. It's food damn it. It for sustenance. If I wanted an experience, I'd eat street food in a foreign country or go to a dinner theater. Make it taste good or stop wasting my time. Sorry. Rant over. I'm not losing so far but I haven't added anything to it either.

That's about it. Nothing special honestly. I'm not much of a gambler. I'm ok with ho hum in this department really.

[WSSix]

Oh, I forgot to mention, once/if CRC and MCEP recover, I'll most likely dump them in order to move onto something more stable. We'll see what happens between now and then but that's the plan as of now.

VAL I'm not sure what to do with assuming the Sherwin Williams deal doesn't fall through. Sherwin has a good chart and good numbers. I may just let it ride like I was planning to do with VAL. I'm fairly certain the worst that will happen with this pick is it doesn't go anywhere or do more than collect the small dividend. I have no intention of adding to this position as of now.

ZOES we'll see. I may just get tired of owning it and move on. Then again, I remember people that got tired of Chipotle not going anywhere and sold for a loss when it was still around $50 a share. Unless, it starts showing signs of steady increase, I have no intentions of adding to my position.

[96z28ss]

Not to scare you but, The company I work for is the largest buyer of Sherwin Williams automotive paint in the PNW. We just announced the plant is closing and moving to GA. They won't be painting in GA. Thats millions of dollars a year they just lost.
They might not feel it, but i'd thought I put out this warning since you mentioned it.

[WSSix]

So that means you're out of a job now? Or are you moving to GA? It's nice down here. I'm biased.

[96z28ss]

Yes I will be unemployed on May 27th. They made me a good offer. I had to decline at this time. My brother lives in Decatur. I've visited a few times, and been to corporate a few times.

[GregWeld]

Not to scare you but, The company I work for is the largest buyer of Sherwin Williams automotive paint in the PNW. We just announced the plant is closing and moving to GA. They won't be painting in GA. Thats millions of dollars a year they just lost.
They might not feel it, but i'd thought I put out this warning since you mentioned it.




LOL --- Their CEO made $12,488,000 in compensation last year.... and they just bought Valspar for 11.5 BILLION.... They can afford to loose an account here and there.

[WSSix]

Yes I will be unemployed on May 27th. They made me a good offer. I had to decline at this time. My brother lives in Decatur. I've visited a few times, and been to corporate a few times.

Sorry to hear that. I hope you are able to get back on your feet quickly.

[GregWeld]

Once again - I'm going to use just one name to make an example of how the market can work for you...

When this thread started (12/2011) Philip Morris (PM) was paying a dividend of 77 cents per share and their share price was around $75.... while we played and talked and learned -- this unexciting boring "sin stock" kept working and is now paying $1.02 per share and is trading at $100.

If you bought at $75 -- your percentage being collected on it is now 5.44% and you've had a very nice long term capital gain.

I can remember - at the time - discussions about the prices being too high or overvalued.... LOL


My guess is -- not many around here have gotten a 30% pay raise in the same timeframe.

[SSLance]

Keep on preaching the word Greg... :)

Just noticed that my XOM is almost back to the green side vs cost basis (including dividends reinvested). If I look at just dollars invested and value now, I'm in the green again.

Now I just need KMI and ETP to follow suit.

[GregWeld]

Keep on preaching the word Greg... :)

Just noticed that my XOM is almost back to the green side vs cost basis (including dividends reinvested). If I look at just dollars invested and value now, I'm in the green again.

Now I just need KMI and ETP to follow suit.


Note I colored those two in RED!!! LOL


Trust me on the KMI and ETP - Those two are just PAINFUL!!

I own 25,000 shares of KMI @ $36.34 or in other words a paper LOSS of $446,000 and a cut in dividend income from over $60K per year to $12,500

I own 15,000 shares of ETP @ $56.67 for a nice paper loss of $344,000 but at least for now it's still paying the dividend ($63,300 per year).

[WSSix]

Yeah, it's nice seeing the oil stocks starting to recover or at least not continue to drop. I hope this trend continues. I'd like to be green in those again.

[toy71camaro]

Once again - I'm going to use just one name to make an example of how the market can work for you...

When this thread started (12/2011) Philip Morris (PM) was paying a dividend of 77 cents per share and their share price was around $75.... while we played and talked and learned -- this unexciting boring "sin stock" kept working and is now paying $1.02 per share and is trading at $100.

If you bought at $75 -- your percentage being collected on it is now 5.44% and you've had a very nice long term capital gain.

I can remember - at the time - discussions about the prices being too high or overvalued.... LOL


My guess is -- not many around here have gotten a 30% pay raise in the same timeframe.


I didnt go the PM route back then... but went the MO route. Purchased at $30. it's since doubled, and my Yield on Cost is 6.3% (i made an additional purchase in the middle in there at $40/share). One of my best yet. :D :D :D Based on my calculations, my Total Return is 123%. Yay! :G-Dub:

[87SS]

MSFT looks good after a 7% drop.:superhack:

[GregWeld]

So here's where there may be some "interest".... Apple (AAPL) posted very disappointing earnings after the close of the market today.... Nasty earnings really - with almost every segment of their business down and down pretty hard.... 12 and 15%

What's my point? We always need to be aware of FUNDAMENTAL CHANGES....What those look like are hugely variable! Some fundamental changes are good! Look at McDonalds (MCD) when they added a new CEO - who then promptly changed the menu (adding breakfast all day) and BAM! The stock took off big time.

Is the disappointing Apple sales number (top line) a fundamental change in the market place? What does it say? Does it say the consumer is weak? Or has the Apple product hit it's peak? Has something else come out that's better? If so, I'm not aware of it. But here's something that might be contributing...... I used to get a new phone whenever my "2 years" was up - because it was a cheap upgrade by just extending my phone contract. NOW!?!?! They want me to pay full price for the new toy.... to which I say - Heck no! My current phone is just fine.

So is that having an affect on sales all across the board? No new phone - no reason to go into the store - therefore no "extra" sales because of a lack of interest/traffic??

I don't know - but it's certainly interesting! Is there a fundamental change in the wind --- or are we just seeing a weak consumer or both??

[Vegas69]

I'm starting to see many similarities locally that I saw just over a decade ago. While I don't see the indicators there for the same type of meltdown, I do know that things cycle and I think Spring is over and we are well into Summer, maybe even approaching Fall in the cycle.

Housing is up over 40% in less than 4 years
People are spending, spending, spending on non essentials.
The construction industry is BOOMING driving construction costs up substantially. I met with a local architect that is a real player. He said it's curtailing the commercial segment.
Low to no down payment programs are back for housing
Sloppy and new professionals are coming back into my industry
A recent Inman poll showed a majority of Americans are moderately optimistic to optimistic about the real estate market. That's a stark contrast from a short time ago.
I have a listing appointment tomorrow where the value is ABOVE the price they paid in 2005!

We are coming up on 5 years into our housing recovery. The median price of a home has stayed stagnant for 9 months with a shortage of inventory. The stock market is up there...look at its growth in the same period.

I do feel the foundation is much stronger this time around. I just think the next cycle is coming on in 1-3 years. I want to be cash heavy and debt free this time around.

What's your local economy or industry feel like?

[GregWeld]

What's your local economy or industry feel like?




If you're building a NEW house here - you might have to just get in line. Prices are way up - labor is not only tight - it's short. This is a SECOND or third home market and the projects being done are multimillion dollars (one house is 12,000 square feet). BUT....

If you have an existing CONDO (many here were built in the '70's) then the market is soft and prices have NOT gone up and in many cases have gone down. My realtor publishes a newsletter every Friday showing all the statistics and most are down or negative from a year ago comps. This is contradictory when compared to the NEW Town homes being built by the Sun Valley Corp and the foot of our street... they're larger than the older Condos - have single car garages - and are selling like they're giving them away (mind you - there are only 36 units). They're 1.3MM and up. So there seems to be a group of people that can afford "better" that are buying yet the "normal" second home market is suffering. Is this because of the financial strength of the buyer? The 1.7 guy can get (or doesn't need) financing? Where the $750K guy is fighting trying to get a mortgage? IDK.


http://www.whitecloudsresidences.com/townhomes.html


Note how many have the "Sold" red dot on them! And remember that these are SECOND or VACATION homes! So the money is being spent - just not on the middle of the market.

[SSLance]

The local "Spring homes tour" is going on right now and they have made note that there are more new homes included in the tour now than since 2007. I see more construction rigs on the highway and at QuickTrip every morning than I have in years. My friends that still dabble in new home construction (mostly starter homes done on a part time basis) are selling everything they build before they are finished.

I guess that all points toward a healthy real estate market at least in these parts anyway.

The no down payment loan option being available again freaks me out just a bit though, will we never learn?

[glassman]

Well said you guys.
Todd, I'm seeing the same thing here in the Bay Area, my main market being the East Bay (read, mostly middle management/engineer types, not the mega wealthy of the peninsula). Certain zip codes around here didn't go down proportionately to the average going down of other areas (read, mid to lower middle class) and those area continue to be strong in the real estate market. But i've only got a "bottom feeder" read on the real estate market (my glass company does a great deal of escrow transactions and i'm now doing glass/window inspections for people willing to pay for my reports).

Personally, i do not think this type of market (real estate) is sustainable, i can't see the masses and number of well paying jobs growing at the same rate as consumerism., But, thats just my opinion, i'm probably off 180*.

Like you said Greg, slow and steady investing is what "wins the race"...

Isn't investing, buy what you know? and since i know alot about housing, location, maintence, building, litigation etc, i should be focusing on buying REIT's or a duplex or fourplex or commercial property...But I don't, primarily cause i dont have the large capitol required in this market area., .in the mean time, i continue to save, maximize my pension contributions, moniter my Schwab accounts (minor stock investion) and buy down my mortage (fixed @ 2.75%, 10 years left)....

[LuxurySportCoupe]

It's kind of scary looking at my generation in the future (I'm 26). Everyone my age just spends and spends without thinking about their future at all. Everyone has to have the latest and greatest phone, etc. When it comes to housing, no-down payment loans have become the norm, and I get funny looks when I tell people that I got a 15 year term on my house. When it comes to cars or anything else, if the money isn't there, well, let's just take out another loan! Most my age only see a monthly payment, with no real understanding of what things cost, or even the value of a dollar. A few of my friends get it, but when I bring up investing to most, the response I get is "that sounds like some real wolf of wall street stuff." Here in Michigan, the average wage is low too, so it's not like everyone is going to sock away enough cash to retire on without investing. Anyway, the housing market around here has plenty of buyers or want to be buyers, but not much inventory. I just bought a house last year, and when I was looking, it seemed like there was no middle ground for pricing, there were either small houses that needed alot of work in the 40-50k range, or houses that are 150k+ (I know that sounds cheap to alot of you, but like I said, the average wage is low around here. I'm at $20/hr and my friends think I'm rolling in piles of cash, lmao).

[Vegas69]

I made my post sound kind of doom and gloom. I don't believe that is the case. Our median price is still 95k below when the balloon popped and we have a low median at $220,000. Affordability is still good.

The construction industry, consumer spending, and stagnant median price with a shortage of inventory makes me think we are getting closer to the next cycle.

I do think the short term is solid. My real point, start preparing NOW to take advantage of the next Winter. They always come!

[ironworks]

I made my post sound kind of doom and gloom. I don't believe that is the case. Our median price is still 95k below when the balloon popped and we have a low median at $220,000. Affordability is still good.

The construction industry, consumer spending, and stagnant median price with a shortage of inventory makes me think we are getting closer to the next cycle.

I do think the short term is solid. My real point, start preparing NOW to take advantage of the next Winter. They always come!

If I had to guess I would say the economy is better in Las Vegas then alot of places. Cars are selling, I know that. Its a much different deal in my area with the price of oil. It will be interesting to see what happens with this next election.

[GregWeld]

So once again the FED leaves the rate unchanged.... and that tells you the economy is just "okay". Globally we know various countries are loaded with debt and economies that aren't great.... China's "customers" (everyone else in the world) are not buying what they were - but let's not forget China is "slowing" to "only" 7% growth. The USA hasn't seen 7% growth in like "forever"!! OMG what we wouldn't give to just have 5% growth!!

We know that oil can be a big contributor to "inflation" - and obviously it's not inflating anything... This is good and bad. Good for "us" with cheaper gasoline and heating oil... but if you're in oil (me) - it sucks!

And WOW! If you were in Buffalo Wild Wings (BWLD) you're getting murdered! Was this a "priced for perfection" stock?? You always have to be on guard if you're in stocks that have that type of share price!

[96z28ss]

. But here's something that might be contributing...... I used to get a new phone whenever my "2 years" was up - because it was a cheap upgrade by just extending my phone contract. NOW!?!?! They want me to pay full price for the new toy.... to which I say - Heck no! My current phone is just fine.

So is that having an affect on sales all across the board? No new phone - no reason to go into the store - therefore no "extra" sales because of a lack of interest/traffic??

I don't know - but it's certainly interesting! Is there a fundamental change in the wind --- or are we just seeing a weak consumer or both??

I was thinking the same thing. I just recently got a new phone and was shocked to learn I had to buy the phone. Even if you go for the 2 year payment plan on the purchase of the phone. Your cell bill went up that much.
I think this will hurt sales of the phone for a couple years till everyone is conditioned to it.
Will it effect Att and verison stock also? If people keep phones longer they can't lock people to 2 year contracts anymore. Makes it easier for people to jump to another carrier.
Prices for good used phones must be going up also.

[glassman]

Todd, fyi, i didn't see your post as negative at all. I saw it as "it is what it is", mine may have seemed to "negative nancy".....I would have to say i'm neither an optimist or pessimist, i'm a realist.

[Vegas69]

If I had to guess I would say the economy is better in Las Vegas then alot of places. Cars are selling, I know that. Its a much different deal in my area with the price of oil. It will be interesting to see what happens with this next election.

That's a good point, it comes down to what dictates your life. Local influence or continental. For me it's both. With a majority being local at this point with my business and real estate holdings.

I do have to wonder how many are judging the current economy by the unrealistic trends last decade? Everybody was making money and flush. It was EASY. That's not how it's supposed to be. It does take hard work and faith to be successful with any sticking power.

Bottom line, pay attention, analyze the market and try not to get caught with your short around your ankles.

I still go back to the fact that the stock market has been strong. Look at the 5 year charts. Our local real estate market has been strong for nearly 5 years. The national market has done well too. For me, it's been a huge Spring. I'm ready take advantage of those gains and prepare for the next wave. Maybe I've just worked my ass off, but I'm not taking any chances.

[JKnight]

Here in Phoenix, in my micro-economy (neighborhood), we had a nice real estate run through September-ish 2015, it seems as though things have cooled significantly since then. Not a decline, just not the substantial growth seen in the prior 4 years. Given the run up though, I think it's more sustainable than the prior bubble. I'm expecting a pull-back, but not necessarily a collapse. Housing wise anyway...

[GregWeld]

We should have all bought a million bucks worth of AMAZON (AMZN) this morning!

Just WOW! What a beat! The polar opposite of Apple (AAPL).

I don't know about you guys - and I don't own the stock - but I buy EVERYTHING on Amazon Prime and I mean EVERYTHING. Some days we get two boxes a day from them. I even bought my load leveling hitch for the new truck and trailer from them. And the new compressor for the trailer etc.

I only wish it paid a dividend - but you guys are different - you're not living in retirement (yet). If you'd have owned Amazon last week - maybe you'd be retiring early!! LOL

While you're looking.... check out the 485 P/E..... versus Apple (AAPL) 10.55 P/E --- Talk about being "priced for perfection"!! WOW!!

[LuxurySportCoupe]

I've got Amazon, and it had dropped since I bought it several weeks ago, but like has been discussed in this thread, I didn't panic and it paid off. Too bad I don't have very many shares.

[AMSOILGUY]

I'm sad to say I missed out on my first real-estate investment by 45 minutes yesterday. :bang: I already had a tenant that was going to pay rent that covered the mortgage and I would have had 1/3 for myself. This commercial property sat on .51 acres and was 1890 sq. ft. My offer was submitted 45 minutes after they already accepted an offer of 115k which was 5k less then mine, the list price. The listing was posted 4/25/16(Monday) I found it on Tuesday night. I went and looked at it Wednesday got financing Thursday morning and submitted my offer that day. It is literally 2 minutes from my house. I guess things happen for a reason.
http://s1342.photobucket.com/user/ehlersjake/media/missed%20investment%201_zpsr17csrva.jpg.html?sort= 3&o=2
http://s1342.photobucket.com/user/ehlersjake/media/Missed%20Investment_zpsls73ffxm.jpg.html?sort=3&o=0
http://s1342.photobucket.com/user/ehlersjake/media/missed%20investment%202_zpslq1y2wtr.jpg.html?sort= 3&o=1

At least I'm in the green on all 3 of my very small holdings that equal $900.00. Only a small difference of 119k :hairpullout:

[GregWeld]

Jacob - That would have been a nice place! Like they say - timing is everything.

I once missed a house that I really wanted by about 15 minutes. The seller had just accepted an offer before we called with ours. Oh well.

[GregWeld]

I've got Amazon, and it had dropped since I bought it several weeks ago, but like has been discussed in this thread, I didn't panic and it paid off. Too bad I don't have very many shares.



We never have enough shares of the "winners" and always have too many shares of the losers... The key is just to keep plugging along and keep investing. Good for you for being in Amazon! I think they've only just begun.

[Flash68]

I'm starting to see many similarities locally that I saw just over a decade ago. While I don't see the indicators there for the same type of meltdown, I do know that things cycle and I think Spring is over and we are well into Summer, maybe even approaching Fall in the cycle.

Housing is up over 40% in less than 4 years
People are spending, spending, spending on non essentials.
The construction industry is BOOMING driving construction costs up substantially. I met with a local architect that is a real player. He said it's curtailing the commercial segment.
Low to no down payment programs are back for housing
Sloppy and new professionals are coming back into my industry
A recent Inman poll showed a majority of Americans are moderately optimistic to optimistic about the real estate market. That's a stark contrast from a short time ago.
I have a listing appointment tomorrow where the value is ABOVE the price they paid in 2005!

We are coming up on 5 years into our housing recovery. The median price of a home has stayed stagnant for 9 months with a shortage of inventory. The stock market is up there...look at its growth in the same period.

I do feel the foundation is much stronger this time around. I just think the next cycle is coming on in 1-3 years. I want to be cash heavy and debt free this time around.

What's your local economy or industry feel like?

Agree with most of your analysis here. I've been looking for add'l rental properties since I bought my last one in late 2014 but the bidding and pricing is just insane in the areas I want. But with the low fixed rates, and skyrocketing local rental rates, I am still looking for something "acceptable" to me in terms of my own analysis and requirements -- neighborhood (path of progress), tenant situation (vacant vs occupied), etc -- as my target area is about the most anti-landlord you can find. But I welcome that as it keeps most of the scaredy cats away or those unwilling to deal with that.

I know I could sell my 4 plex I bought 18 months ago for $200-300k more, but I have an incredible 30 year fixed rate so will hold it. I mean, what would I buy with the proceeds anyway?

[GregWeld]

Agree with most of your analysis here. I've been looking for add'l rental properties since I bought my last one in late 2014 but the bidding and pricing is just insane in the areas I want. But with the low fixed rates, and skyrocketing local rental rates, I am still looking for something "acceptable" to me in terms of my own analysis and requirements -- neighborhood (path of progress), tenant situation (vacant vs occupied), etc -- as my target area is about the most anti-landlord you can find. But I welcome that as it keeps most of the scaredy cats away or those unwilling to deal with that.

I know I could sell my 4 plex I bought 18 months ago for $200-300k more, but I have an incredible 30 year fixed rate so will hold it. I mean, what would I buy with the proceeds anyway?



Beware what happens to VALUES of property when the interest rates begin to rise... people will be shocked to see what happens to the value of the properties as the rates price people out of the payment.

I think we're in an interest rate bubble on property. While the buyers since the big bust have real down payments and real credit... Incomes have not really been rising. The historically low interest rates has made that "okay"... But I think there's another shoe to drop when we see these rates begin to rise.

I personally think the FED understands this dilemma! The damage that will be done to BOND holders, the housing market, and the stock market could be complete carnage. Of course this is all dependent on the speed and percentage of any rise in rates. And again - I think the FED is well aware of what all of these interrelationships are.

The "cap rate" on rentals is always price dependent. As rates rise the cap rate required to make a building attractive will also have to rise... which means the value will need to decrease if the rental rates can't be raised. This has been the way of the world since the beginning of time so it shouldn't come as a surprise to anyone. Of course it's a bit more complicated than this because there's also the NOI (Net Operating Income) What's left after the COSTS to maintain, insure, manage the building (rental). NOI and Cap Rate are what determine the value of a commercial property. The market value is determined by dividing the NOI by the AVERAGE CAP RATE for similar properties in the area. Unlike trying to determine the value of a single family home - which is based on similar homes of similar condition that have sold recently... That really doesn't exist for commercial properties. So there has to be some way of calculating the "value" of a property and the Net Operating Income divided by the average cap rate is about the only way to make this determination.

Of course - it's always more complicated.... because you might be buying a run down building in an area of nicer buildings - and you can clean it up and raise the rates etc. But you'd still need to determine the end result to know what you can pay for it "as is" and then add your costs for fixing it up - and you'd have to know what the units are going to rent for after you're done.

We recently did this for a building in Seattle. It was the ugly one on the street - needed updating. This is capital intensive, income disruptive, and takes professional management! The results can be surprisingly good if done correctly! Like most things - if it was that easy - the fat chicks would be doing it.

[GregWeld]

A quickie search shows San Francisco and San Jose as having some of the lowest cap rates in the country. There are other markets that share this, of course... but the cap rate for Multi-family units there is about 4.5%. Seattle shares in this relatively low cap rate.

The "market" for investment in commercial properties competes - as does every other form of investment - with the expected returns from other forms of investment. In order to make an investment "attractive" - it needs to return some basis points above a mean. In a lot of investments that mean is the 10 year treasury.

Right now - a 10 year treasury is paying 1.84%.... so if you do a quick calculation... a 4.5% cap rate is 266 basis points above the 10 year. You can see how that will be squeezed if the 10 year jumped to a paltry 2.00% and even worse at 2.25% etc. Suddenly the investment return of 4.5% isn't looking so hot.

Long term - like any investment - there has to be some thought put in to where we are in any market cycle - what the future looks like - and the net end result of a particular investment. It's infinitely easier to take a loss on a stock if the market turns to crap... you own 100% of the investment - unlike a property with a mortgage.. which has sales commission costs etc. and could possibly be underwater! But like a dividend paying stock - commercial property provides income and the POTENTIAL for appreciation over time.

[Vegas69]

Agree with most of your analysis here. I've been looking for add'l rental properties since I bought my last one in late 2014 but the bidding and pricing is just insane in the areas I want. But with the low fixed rates, and skyrocketing local rental rates, I am still looking for something "acceptable" to me in terms of my own analysis and requirements -- neighborhood (path of progress), tenant situation (vacant vs occupied), etc -- as my target area is about the most anti-landlord you can find. But I welcome that as it keeps most of the scaredy cats away or those unwilling to deal with that.

I know I could sell my 4 plex I bought 18 months ago for $200-300k more, but I have an incredible 30 year fixed rate so will hold it. I mean, what would I buy with the proceeds anyway?

My original plan was to buy and hold my two investment properties for the long term. In fact, until they were paid for by the tenant. I didn't expect them to appreciate so fast (One I'm selling has nearly doubled) and my financial picture and vision was different at that time. I tend to be on the conservative side and don't mind getting out EARLY. I got lucky and did on a few properties 10 years ago. I got out a little late on one because I was greedy. That greed cost me a few bucks. While I still think they are very solid long term plays, I'd rather be debt free and cash heavy moving into the next cycle.

At the end of the day, it all comes down to your own risk tolerance, financial position, and personal circumstances. Personally, I like the idea of reducing complexity and liabilities for more time to live life and be a Dad moving forward.

[GregWeld]

My original plan was to buy and hold my two investment properties for the long term. In fact, until they were paid for by the tenant. I didn't expect them to appreciate so fast (One I'm selling has nearly doubled) and my financial picture and vision was different at that time. I tend to be on the conservative side and don't mind getting out EARLY. I got lucky and did on a few properties 10 years ago. I got out a little late on one because I was greedy. That greed cost me a few bucks. While I still think they are very solid long term plays, I'd rather be debt free and cash heavy moving into the next cycle.

At the end of the day, it all comes down to your own risk tolerance, financial position, and personal circumstances. Personally, I like the idea of reducing complexity and liabilities for more time to live life and be a Dad moving forward.



You'll only ever know "early" and "greedy" when it's history. You never know this at the time of the decision. I 100% agree with your statement that it all depends... each persons time horizon - ability - goals - are different.

Being DEBT FREE is one of the biggest statements a person can make. It's also one of the biggest goals EVERYONE should have. Nobody ever went broke taking a profit.

XOXO

[Vegas69]

You'll only ever know "early" and "greedy" when it's history. You never know this at the time of the decision. I 100% agree with your statement that it all depends... each persons time horizon - ability - goals - are different.

Being DEBT FREE is one of the biggest statements a person can make. It's also one of the biggest goals EVERYONE should have. Nobody ever went broke taking a profit.

XOXO

Great point buddy...:thumbsup: I was just telling a couple about you yesterday. They are moving up to the Boise area to retire.

I read an analogy not long ago. It was comparing us to a dog fetching a bone. Meaning, as soon as one goal is achieved, on to the next. While I think it's important to be ambitious and goal driven, I've seen many keep stepping it up in a relentless pursuit that could alienate their families and health. A bigger house, more expensive car, lifestyle, etc.. The problem, you are now forced to keep working like a DOG. Your lifestyle and corresponding liabilities make it very hard to let up once you have obligated yourself. Bottom line, your lifestyle stays on pace with your income growth.

I've been the dog achieving worthy goals through hard work and discipline. I needed to by the way. At some point, it isn't that fun anymore. Lately, I've been working on simplifying and satisficing. It results in moving towards your greatest values and better energy/time management. A big part of it is being content with what you have. That's a challenge for most of us. It doesn't mean you can't be ambitious. It just keeps you from being the dog fetching the bone.